Deal Seeker Study Says Too Many Discounts Can Be Bad for Business
“No, thank you. I’d rather pay full price.”
Sounds silly when you say it that way, but as Experian points out in their new study, a good deal can sometimes be a bad thing.
There are two major issues – first is the perpetual deal. Deal days like Black Friday aren’t special anymore, which leaves consumers worried that tomorrow’s deal might be better than today’s deal, so they hold off buying.
Then there’s the point of sale deal – “these are buy one, get one 50% off. Do you want to go back and get another?” Sure I do, but I was ready to check out and go and now I have to get out of line and start over because I feel stupid leaving a deal on the table. Thanks retailer – your deal just made me feel bad.
And Barnes & Noble, I dread your check-out line because I know the salesperson is going to ask if I want to join your club. Yes, I know I’ll save money on every transaction but when you ask and I say no, I feel bad. Bad enough to avoid shopping in your store.
Ironically, the deal doesn’t even matter to a large portion of the buying public. Even die-hard deal seekers said price was the 4th most important factor when choosing where to shop and what to buy. FOURTH. What is important? The brand and the environment.
Note to online sellers – environment works the same online and off. I don’t want to shop at a dirty, disorganized store and I don’t want to shop at an online store with blurry photos and broken links.
As you can see, Experian has identified six types of deal seekers. Knowing where your customers fall on this chart could put more money in your pocket.
For example, two of these types aren’t interested in deals at all, so collect every dollar you deserve.
Deal Indifferents — deal or no deal, give them what they want. Deal Indifferents make up the largest segment of the population, almost 30 percent of adults, and are unlikely to change their behavior because of a deal. Of these consumers, 60 percent go shopping only when there is something specific they really need. Because they do not care if they get a deal, marketers who employ a “mass-couponing” strategy will waste valuable resources on this sizable group and miss out on profits they could have otherwise kept.
Deal Rejectors — get in, get out: convenience rules. These consumers are the most shopping-averse group, wanting convenience over anything else. For these consumers, who are 58 percent male and tend to be older, convenience, service and brands far outrank price when it comes to making purchase decisions. This group of shoppers has higher-than-average discretionary income and a willingness to part with it. They are also 59 percent less likely to trust information they receive through social media channels.
For this segment, loyalty is more important that discounts:
Deal Thrillers — love their deals, but are brand loyalists too. Deal Thrillers, with a mean age of 49, love getting a deal but are also brand loyalist. Deal Thrillers are 57 percent less likely than the average population to say that a coupon or sale would encourage them to try a new store. In fact, they are less likely, in general, to use coupons at all.
On the other end of the spectrum we have a group that is all about the savings. These are the folks who only eat at your restaurant when there’s a coupon and they aren’t likely to spread the word. Unless you’re in the close0ut biz, these shoppers aren’t doing anything for your business.
Offline Deal-Seekers — best deals, traditional media . These shoppers, a majority of whom are over the age of 55, are avid deal-seekers but to a limit. Of these consumers, 63% report that they head straight to the clearance rack when they enter a store but they are unwilling to travel far to shop, even if it’s an outlet. They are highly social with many different groups of friends, but their influence in the digital domain is limited as they are less likely than average to engage in social media. This segment is also less likely to use the Internet to plan shopping trips or compare prices.
Here are the two groups that can really help your business grow:
Deal Takers — social, but not influential. Deal Takers are highly educated and affluent consumers who will accept a deal if offered, but are less likely to seek one out. Promotions targeted at this group of consumers must be well publicized online and offline. They are 24 percent more likely than average to try a new store if they are offered a sale and 21 percent more likely to try a new store if they have a coupon. They are also 21 percent more likely to connect to social media on a variety of different devices, 31 percent more likely to click on links shared on social media and 17 percent more likely to pay attention to ratings and reviews. However, they are much less influential online than Deal-Seeker Influentials.
Deal-Seeker Influentials — always seeking the best deal and the next hot thing. These shoppers, which make up approximately 17 percent of the total population, are constantly looking for the best online, offline and mobile deals. Deal-Seeker Influentials tend to be young, highly educated, socially active consumers who love shopping but don’t expect to pay full price. They are almost 2.5 times more likely than the average American to say that they trust the information they see about products on social media and purchase a product when they have seen it advertised on social platforms. They are very active on the Internet and social media, especially when it comes to talking about their favorite products and brands. Interestingly, they are also highly influential within their social circles and tend to be trendsetters.
What’s interesting is that a lot of deal seekers have money and plenty of it. They’re not looking for a deal in order to make ends meet, they simply feel better paying less. Who wouldn’t? We have to stop thinking of deal seekers as penny-pinching extremists who drip dry paper towels in order to use them again and again.
The deal seeker you want is the one who will take the deal then add six more full price items to the cart. The one who takes the deal then raves about your service to all 3,000 of her closest friends on Twitter.
Want to know more about how to reach this segment? You can buy the full report on Experian for the low, low price of just your contact information. Now that’s a great deal.