Retail is Back: Leveraging Incentives to Gain Market Share on The Upswing
While no one really knows if we’ve collectively weathered the worst of the pandemic “storm,” what we do know from recent data is American consumers are ready to spend again. Last week, the Commerce Department reported that retail sales rose a record 17.7% in May from the prior month – the biggest jump in records dating back to 1992. “The U.S. consumer’s back big time and she’s spending,” said Craig Johnson, president of Customer Growth Partners, a retail consulting firm.
For the fortunate individuals that were able to hold on to their jobs, collect unemployment or receive other government benefits, they have essentially been in a state of forced savings. With retail, tourism, entertainment and dining virtually non-existent for months, those aforementioned consumers have cash on hand (and in their savings accounts) and are eager to find ways to use it to benefit their “new normal” lives.
According to a recent Wall Street Journal article, “people are flocking to home-improvement stores and car dealerships. They want to install pools in their backyards and Jacuzzis in their bathrooms. Spending on furniture has jumped. So have sales of fitness and sports equipment.”
At 360insights, our latest data supports the move to spend on home improvement items, especially for kitchen and bath upgrades. Our claims on consumer rebates and other key incentive solutions are up over 50 percent from the five-week bottom during the height of the COVID-19 shutdown.
There’s no doubt this is some good news in a year that was sparse on anything positive – especially for the retail sector. But, how are retail organizations taking advantage of this trajectory to create customer loyalty and increase market share? How are they leveraging consumer interest, coupled with a new buying journey to jumpstart their own revenue engine?
Leverage the Right Engagement Tools to Drive Sales
Leveraging the right mix of incentives not only makes the difference in getting partners, operations and sales back and running at full bore, but incentives also help organizations align and shift priorities to create impactful ROI.
- Consumer Rebates – Use CR to go drive sales, capture market share and keep the pulse of the customer. What are customers willing to do and what aren’t they? What made them willing to buy during the virus or coming out of it? Are your retailers innovating, and can other retailers learn from them? Monitoring purchase behavior is critical during this time period; not just that they purchased, but why and how.
- SPIFFS – SPIFFS can lead the charge as an effective motivator. As the retail channel tries to “hit the ground running” post-pandemic, SPIFFS are an effective way to gain mind share. Through well designed and measured SPIFFs, you can incent the right behavior that drives not just immediate sales, but sustainable sales growth. We have to think past the initial uptick and measure true effectiveness.
- Sales Allowances – Use sales allowances to protect against price erosion. Keep close track of the price points where consumers are engaging, as it will likely be different from a pre-COVID world.
- CoOp/MDF – In the recent 2112 Group Report, 51% of channel professionals rated MDF as the most effective means of influencing partner behavior and performance. That perception isn’t changing amid COVID-19 disruptions. What is changing is the shift from live events, to using those funds to initiate Digital transformation. From localized marketing to social media, the right sales and marketing enablement is the best way to drive demand at the top of the sales funnel.
- Automated Incentive Platform – With the massive shift to digital programs and initiative, it’s more important now than ever to have visibility into all of it – using one single pane of glass. Leveraging a sales incentive platform can help retail brands manage multiple programs at once, have visibility into what’s working and what’s not and provide actionable insights that will improve business decisions.
These are unprecedented times for all brands, in every region across the globe. Retail organizations are being forced to do more with less, while also being tasked to restart a sales engine that looks and feels very different from 100 days ago. Global salesforces are grappling with new structures, processes and the uncertainty of what tomorrow holds. However, smart retail leaders that understand the opportunities that are just now beginning to emerge, will win big when it’s all said and done. Let the right tools and strategies guide, enable and support you on the upswing.