Future Trends for Planning Your Price-Promotion Exit Strategy In 2024

By Ian Gibbs, Director of Insight at the DMA

First, a cost-of-living crisis, and now a recession. It might be being framed as a technical recession, but marketers looking to tackle the thorny challenges of customer acquisition and engagement in these challenging times do not have the luxury of getting off on a technicality. A decline in consumer demand has led to a huge shift in short-term marketing strategy to price promotions and discounts, which price-savvy consumers have proved very willing to take up. As a method of hitting those quarterly sales targets, special offers really help, but at what cost?

The cost is one of a long-term decline in customer loyalty. Last year’s How to Win Back Customer and (re)Build Loyalty report highlighted that while consumer receptivity to price promotions was at a five-year high, so was their willingness to switch brands as soon as a better offer came along. In 2023, 61% of consumers said they felt less loyal to brands these days – a huge 20% increase from 2022.

Brands need a firm price-promotion exit strategy in place to improve consumer loyalty and this can only be done by combining deals and offers with a concerted focus on customer experience and brand-building activity. Both approaches will create deeper emotional connections between consumers and brands, reducing their price sensitivity and making them less prone to switching.

Only by keeping one eye on the future can marketers truly plan an effective price-promotion exit strategy. Supported by a survey of 2,500 consumers, the DMA’s recently released Customer Engagement Future Trends 2024 report covers three key areas marketers must consider when they are looking to grow and retain their customer base:

1. AI “One Year” On: AI has been around for years, but it is the advent of generative AI that has the ability to profoundly change the efficiency with which marketers invest their budgets. Through the automated creation of ad content; the out-sourcing of low-level tasks such as keyword analysis and trend research; the impact of machine learning and synthetic data on insight generation; and the use of AI-driven chatbots, AI has the potential to allow marketers to do significantly more with less. However, with over half of consumers concerned about AI's use in marketing communications, marketers must be cautious in their approach. It is only through clear signalling, data privacy best practice, and a tangible improvement in customer experience that consumers will warm to AI. The early failings of DPD’s chatbot are a cautionary tale!
2. Personalisation Rebooted: 80% of consumers claim they are open to some form of personalisation in marketing comms, but the challenge lies in the data signals being used to personalise. With third-party cookies on the way out, marketers have a range of options: first-party data (good, if you have it); retail media (great for FMCG brands with no first-party data, but lacking standardisation); the walled garden platforms (powerful marketing tools, but lacking transparency), or new location-based martech solutions from the likes of Herdify and Starcount.
3. Brand Experience IRL: Three-quarters of U.K. consumers believe the high street has changed for the worse, but as always it depends on who you ask, with much higher levels of agreement among older audiences than younger. Either way, with traditional retail spaces in decline, how are brands to create meaningful physical connections with consumers on the path to purchase? These physical experiences are still vital for show-rooming, product trial and creating connections between brands and consumers. As an alternative to retail spaces, 57% of consumers would like to see brands sponsoring other venues such as coffee shops, libraries, etc., and 53% would like to see high street stores offering experiences beyond shopping (e.g., showrooms, photoshoots, community experiences). In 2024, expect more co-working spaces in banks, coffee shops or bookstores and experiential events in department stores. Look out for more digital D2C brands dipping their toes in the real world, as ASOS and Deliveroo have done with their pop-up stores last year.

You can download the DMA’s Customer Engagement Future Trends 2024 report from the DMA website (www. dma.org.uk).

This article was originally published in Engage Magazine. Download your copy here.