I’d like to offer a message to retailers this holiday season (and one typically reserved for the customers they court): Give...and you just may receive.
It is no secret that the retail industry has been severely hit in the current economic climate. The loss figures many retailers are announcing continue to rise, while stock prices of such companies continue to plummet. The New York Times recently referred to the current state of the industry as a “ sales collapse.” Reuters reported the worst overall October sales reports in more than three decades.
And, it comes as no big surprise that discounters are not feeling as much heat. Wal-Mart was one of the few retailers posting gains over the past few months. Consignment shop sales have been steadily up since January.
The dire straits plaguing retailers this holiday season just may offer a silver lining for customers (Read: Coupons!)...and potentially for charities as well (Read: Proceeds!).
Many retailers are attempting to compete (with mega discounters as well as unprecedentedsales of regularly full-priced competitors) by offering coupons, promotions and discounts of the caliber typically reserved for post-holiday shopping. After all, a quick Google Trend scan, shows searches for “coupons” up significantly in the past few months. As retailers try to stand out in the race for thinner wallets...some coupons and promotions may be further tied to charitable donations/philanthropy, as an added incentive for sluggish customers.
This may be particularly smart marketing, given some recent Cone research findings which show: the majority (52%) of consumers still expect companies to give back to the community at the same level, despite the economic downturn while others (26%) expect companies to increase giving. According to a study by World Vision, 71 percent of Americans expect to cut their holiday spending, yet 49 percent report increased likelihood to purchase charitable gifts (or gifts that give back) for loved ones.
A “cause coupon” example was run by the Gap, a retailer widely recognized in the past few years for its philanthropic and cause-related marketing efforts thanks to its Product (RED) line. Last weekend, Gap ran a special Friends and Family promotion...this time tied to charity, called “Give and Get.” The concept was simple – loyal customers received a 30% discount e-coupon and were prompted to select their “charity of choice” from a short list of potentials. The charity in turn receives 5% of proceeds from designated purchases. Once selected, the Gap then automatically sent a new email to the customer designed to pass on to friends and family to partake in the discount, while accruing more donations for his or her very own designated charity. Smart “cause couponing” for many reasons:
- offered discount in a time when consumers have less discretionary income to spend
- provided further incentive to designate corporate dollars to a charity of choice, when consumers may not be able to give as much themselves as they would like
- offered halo/reputation enhancement in times of decreased consumer confidence
- encouraged word-of-mouth through turnkey pass-along tool
- allowed simple level of personalization by allowing customers to choose their charity of choice within parameters
Tying cause-related marketing to such coupons, discounts and other incentives has proven to be good business. Look at tried and true models such as Macy’s Shop for a Cause (consumers purchase a $5 shopping pass, all proceeds from which are donated, and receive 10%-20% off a full day of shopping). Last year $9.5M was generated for designated charities. Earlier this year, in Feb. 2008, Jiffy Lube tied a $3 coupon book to Go Red For Women (the American Heart Association’s campaign benefiting women and heart disease). Jiffy Lube’s results included: $1M projected goal was raised in just eight weeks; new customer acquisition at participating locations was nearly double that of non-participating locations after six weeks of the promotion; more than 20% of coupon purchases came from new customers; and coupon customers spent roughly 50% more than the average customer.
This holiday season, “cause coupons” may provide a win-win-win for companies, causes and customers.
-Anne Erhard, Former Vice President