Sympathy For The (Discount) Devil
We hear the same thing over and over in our surveys: retailers’ business strategies are confounded by consumers’ continued price sensitivity. As much as retailers profess that they would love to ditch a constant downward spiral of promotions and deals in favor of more rational prices and competition based on products, quality, and service, they continue to rely heavily on said promotions in an apparently bottomless race to the bottom.
So last week when I caught up on some reading and encountered trendwatching.com’s June consumer trend on Sympathetic Pricing, I was immediately intrigued. Trendwatching presented various examples of pricing models that brands have used to create a more “human ” face to the brand, by helping consumers in need, expressing sympathy for consumers’ pain points, or rewarding constructive behavior.
Examples they used included discounts or free services for the unemployed (a helping hand), free drinks for people who received parking tickets (sympathy for pain), and discounted air fares for gay rights activists traveling to Russia (rewarding behavior).
Now, trendwatching’s agenda (and one that I share) is to push brands to be more genuine and transparent – and to actually care about their customers, instead of either pretending to care (and transparently failing miserably), or just not even bothering to try.
But it occurred to me as I read through their examples that this kind of sympathetic pricing could be a great way to transition your customers from mass addiction to promotions to more personalized promotions – but personalized based on opted-in behavior, rather than some optimized guess as to what lifestyle offers may or may not be relevant to a specific customer.
It requires the brand to pay close attention to what’s going on locally and be flexible enough to respond, but what if, for example, Dick’s Sporting Goods offered discounts to fans wearing the losing team jersey the day after their team loses? Or Whole Foods offered discounts based on maintaining a healthy weight or blood sugar level or cholesterol level?
However, as I thought through how that might work, I realized that it doesn’t work unless the brand offering the deal really can demonstrate genuine caring about the issue they’re looking to discount or reward. That’s why, at least to me, Toms shoes is a really cool idea (buy a pair, and the company will donate a pair to a child in need), but Bobs by Skechers (which does the same thing) seems rather mercenary and rip-offish, despite the fact that they’re probably doing at least as much good in the world as Toms. And this comes from someone (me) who loves the Skechers brand – I own at least 3 pairs of their shoes (not Bobs) and probably more. Why do I feel this way? Because it doesn’t feel genuine.
So, here’s something to consider. Weaning consumers off of promotions is hard. Really hard. JCPenney is still recovering from its dance with the discount devil. Sympathetic pricing – whether to embrace helping others, helping yourself, or rewarding good behavior – is one potential way to put it back a little on to consumers. Would you rather save 20% selfishly, or 15% if it also helps a cause you care about? How much of a jerk do you look like if you go for the 20% and turn out to be in the minority?
The kicker, though, is that the onus is on the retailer to correctly choose the kind of cause their customers care about. For sporting goods retailers, it’s easy. People care about sports. For general merchandise retailers, it gets a little tougher.
Unless, of course, you have a genuine story to tell, and natural lifestyle affinities that go with it.