In pursuit of brand loyalty

It is easy to measure how a promotional activity has performed. The nature of the discipline, particularly in the retail sector, means that a quick look at the sales activity during the promotional period or counting the numbers of coupons redeemed is a fairly accurate indicator of consumer response.

But brands want more than just a sales spike from their promotions. All promotions and incentives must now prove that they can be part of the brand engagement process. But how can this be proved?Planning director at Wax Communications Craig Buchanan-Smith says promotional activity has to be measured as part of an over-arching campaign rather than a separate activity. “If promotions are used to help build brands, they need to be treated as part of the overall marketing campaign and should be measured against the overall needs of the brand.”

Voucher collection

He refers to the work done with Sainsbury’s Active Kids. “At its heart is a simple idea around the collection of vouchers, but you can’t measure the effect of the activity for Sainsbury’s just on redemption – it has also done a great deal of good for the overall brand,” he says.

Marketers and brand owners are starting to see promotional activity in a broader context as the short-term impact of sales promotions begins to wear thin. Director at Differentiate Chris Radford says: “Repeat studies have shown that below-the-line promotional activity such as price cuts and incentives can stimulate a short-term sales life, but sales will return to their previous levels once the offer ends.”

Radford cites two examples of promotions that lift sales but don’t ultimately sustain growth. “Mobile phone companies are all so busy trying to ‘out promote’ each other that customer turnover remains high and so they are continually having to refill a leaky bucket.

“Packaged goods businesses can get sucked into a vicious circle of buy one, get one free promotions or big discounts. This produces short-term sales lifts, but they encourage customers to wait for the next offer, rather than truly convincing them to buy into the branding on an ongoing level,” he says.

Such short-termism has prompted a drive to ensure that promotional campaigns do more than temporarily lift sales. The traditional belief of the linear link between cause and effect for promotional communication has had to make way for something more sophisticated.

“Current promotional marketing best practice dictates that promotions should drive response and reinforce desired brand perceptions,” says 23red planning director Carol Stickler.

She says that broader promotional objectives necessitate broader measurement. “It is relatively easy to measure narrowly. But if the objective is to build the brand, you need to also track other brand measures.”

Integrated campaigns

But Stickler acknowledges that “as ever with integrated campaigns, isolating the effect is the tricky part”. She says time-series or regional analysis would need to be carried out to see what happens at the times or in regions where you give your brand no promotional support.

“The key is to clarify objectives and means of measurement up front as well as isolate the role of promotional marketing within the wider communications mix. Then you need to identify the primary target for the promotion as well as secondary targets, such as the impact of acquisition campaign on customer loyalty,” she adds.

Victoria White, head of activation at activationtmw – the sales promotion arm of Tullo Marshall Warren – says: “Alongside measuring how a promotion has worked, brands should take into account ‘soft’ achievements which can result from activity as opposed to driving sales. For example, the introduction of brands to a new target audience, or providing support for retailers.

Long-term growth

“All of these measures can be important for a brand’s long-term growth and should be considered alongside a return on investment.” However, Stickler acknowledges the difficulty of isolating the impact a promotion has, apart from a temporary sales lift.

Founding partner at Mesh Marketing Toby Moore comments: “To understand promotional impact on sales requires the unravelling of the consumer brand experience and the customer ‘promotional’ price support. If we could better understand this relationship then brands would have firmer foundations to allocate and measure their marketing spends.”

The greatest challenge facing promotions, it seems, is not that it should be accountable or measurable, but that it is able to tread the line between creating new customers and getting existing ones to spend more money and at the same time staying deftly in tune with whatever lofty brand proposition is being pumped out.