July 17, 2018
By now everyone is well aware of the Amazon Prime Day problem that occurred yesterday. The enticing deeply discounted deals and mass omnichannel marketing efforts successfully drove an unprecedented number of buyers to the site and crashed it, just shortly after the launch. The overloaded site offered little to address the inconvenience and frustration of their customers, other than an apology with a cute dog image.
Loyal Prime members threatened to cancel memberships, and it certainly didn’t achieve the goal of attracting new Prime members as anticipated. However, according to an article in Business Insider, “One Click Retail estimated that Amazon sells about $1 million a minute during peak time on Prime Day, based on last year's data” and Amazon reported an increase in sales up from last year. So, did the deep discounting of Prime Day work or not?
The Prime Day example followed another deep discounting debacle with Build-A-Bear’s Pay Your Age Day campaign. On July 12, customers and their little ones lined up (reportedly forming lines a mile long) to take advantage of the deeply discounted offer to only pay your age for the cost of a new toy. Within hours of the promotion, Build-A-Bear stores found that they were unable to manage the sizeable crowds and had to shut down their stores, turning away thousands of unhappy customers. It was not the outcome the retailer expected.
Deep discounting is a promotional tactic that can deliver excellent results and drive top-line revenue, and as well as promote customer engagement, loyalty, or new customer acquisition. However, there are plenty of examples where a discount strategy backfires from this recent post in Entrepreneur.
Retailers and ecommerce teams should certainly use discounts to achieve specific results and as part of a broader marketing and customer engagement strategy. But it is important to remember that discounts are not the only way to drive results. Having a more strategic, multi-faceted marketing strategy that focuses on personalized customer engagement versus discounts that cut into profit margins is imperative for long-term success.
For all those retailers that felt like they couldn’t compete against the sheer volume of the Prime Day discounts, take heart. Discounts work, but they aren’t the only way to drive sales and in fact, sometimes the risk is not worth the reward. Happy customers and a positive customer experience rate higher than saving a few dollars most of the time. Just ask the people in line at Build-A-Bear.
Learn more about how personalization can help drive better engagement and increase revenue. Download the Personalization Development Study here.