(This is an article I wrote for ADWEEK back in 2002. Still feels true.)
The similarity between the addiction to cocaine and the dependence on month-to-month retail promotions, is chilling.
Similarity #1: Both addictions give short bursts of euphoria and a sense of wide popularity. A deep discount on popular items, like handing out free cocaine, will win you many intense temporary friendships. You will see a sharp uptick of traffic into your store, or into your apartment. However, the consumers will linger long enough only to “Hoover” your loss-leaders and then will disappear, leaving only cigarette burns on the coffee table. They are not likely to turn into long-term relationships.
Similarity #2: Like a high, the grin lasts just long enough for your teeth to dry and then disappears. So too, a promotion will likely get you through the night with lots of jovial activity but when morning comes, as it always does, and when money is needed for food and rent (or brand awareness), the coffers are empty. There is no accrual in the brand bank from nighttime binges on promotions.
Similarity #3: After the stimulus is removed, depression ensues, and there is an over-powering need to maintain the brief uplift with another jolt of short-term spending.
And so it goes.
Having watched many wonderful brands suffer these same vicissitudes, I wonder, is this is any kind of life?
The fact of the matter is that our brands are in business to make money and we cannot make money in the long run by selling wares for less than what they’re worth.
Should we throw out promotions and go cold turkey? Of course not. In the retail world, promotions are an essential part of the marketing mix. What I’m suggesting is, first an intervention, and then partial withdrawal.
As an example, years ago I had a national client (as always in these matters, they must remain Anonymous) who was running promotions 50 weeks out of the year. They knew these promos were driving their brand value into the dirt, but felt they had little other recourse to bring customers into stores.
But they also knew they weren’t going to be able to grow the brand by introducing higher-end products, not when they’re known for cutting deals in the alleyway. Eventually other brands would start cutting the same deals across the street. Yet, they could not stop.
To rehabilitate the brand it took a plan.
From 50 promotions a year, we cut it down to 40 weeks; and to 20 deals the year after. Yes, there were jitters and testiness in the hallways and lots of cigarettes were smoked. The trick, however, was when we replaced the promotional crutch with something more meaningful and longer-lasting.
As we dialed down the “2 for $1.99” messages, we replaced them with messages about new products or repackagings of existing products. Essentially, we replaced “cheap” with “new” and over the course of three years we gave the brand a credibility for something beyond price. Along the way, the brand’s average profits tripled. Not sales, profits.
Does the client still get off on promotions now and then? Well, yes, don’t tell Mom. About every other month or so we still have these spectacular blow-outs where we’re practically givin’ it away, loyal customers are comin’ in and out of our place all night long, and the place is just nuts. But because the brand now stands for something, the promotions are added value, not the only value.
Overall, we discovered that brand will get you through times of no promotion better than promotions will get you through times of no brand.