Optimization of promotions thanks to purchase history
To create effective promotions, companies must take into account their objectives, customer behavior and market trends. Optimizing promotions requires detailed analysis of a large amount of data and prediction. Indeed, it is the sales forecasts that allow to set up effective and relevant promotional campaigns.
But how does the purchase history contribute to the optimization of promotions? What information related to purchases is necessary to set up quality optimized promotions? We will see why it is necessary to use purchase history to optimize your promotions.
Personalize the customer experience by offering targeted promotions
Database segmentation and purchase analysis are among the first steps to creating optimized and personalized promotions. Thanks to the mastery of innovative tools, a company is able to personalize the customer relationship and the commercial offer.
Data extracted from a store's purchase history
The data extracted from the purchase history allows to realize a complete inventory of the sales of a store. Indeed, the analysis of the sales receipts allows to highlight a lot of information such as :
- the list of the best-selling products, the worst-selling products, and the products that only sell when they are on promotion;
- the overall number of orders, as well as the turnover and the average basket over a given period;
- the distribution of sales over the course of a day, week, month, etc. ;
- the quantities sold for each article in the assortment;
- the place occupied by the article in the shelf when it triggered a sale;
- the segmentation of the database;
With this data, each store can determine exactly what it sold, in what quantities and when.
For an online store, the purchase history can also include abandoned carts and cancelled orders. The sum of this information can highlight flaws in the presentation of certain items. Abandoned carts can also be explained by high prices or missing information.
Definition of the optimal promotional scenario for each client
After analyzing purchase history, companies know what products consumers buy, at what time of year and in what quantities. Then they can create an optimized promotional scenario for each customer.
Personalization of the customer experience is a must for both convenience stores and online retailers. Indeed, a mobile application, a website or a store must offer a personalized experience to users and future buyers.
For this, it is necessary to define objectives and to prepare a commercial strategy. For efficient promotional campaigns, marketing will have to make the best choice regarding:
- the price;
- sales mechanism;
- the duration of the promotion;
- Communication budget;
- content of the advertising message;
- the location of the promotion in the store;
All these elements must be adapted to each store or online store, but also to each consumer group. In the case of an online store, the promotion can be communicated by email or directly on the online site. For a physical store, the promotions can be displayed in the shelves, at the top of the shelves, with striking displays, etc. Customers with a loyalty card can receive personalized promotions directly by email.
Increased sales and customer satisfactionBy creating targeted promotions, companies are able to increase their sales and the revenue generated. There is a very simple mechanism for this.
First, the marketing department analyzes the purchase history. Then, it determines the future sales promotion by selecting a product based on the purchase history, but also based on the cost of purchasing that item. So the marketing department selected a promotion that fulfills two objectives:
- appeal to consumers ;
- generate profit.
As far as customer satisfaction is concerned, it is automatic, because the personalization of a discount or a commercial offer is a way to build customer loyalty. Building customer loyalty is also a way to generate more sales.
The benefits of the predictive intelligence platform for promotion optimization
The implementation of targeted promotions and the analysis of purchase history require a considerable amount of data. The marketing department must be able to simulate different promotional campaigns in order to choose the most effective one. Similarly, it must be able to schedule promotions in advance in order to have enough stock.
Among all the existing tools, the predictive intelligence platform is the most complete and powerful tool. Indeed, thanks to machine learning, all the information coming from the marketing department, the finance department or the supply chain is compiled. It is a true collaborative tool that guarantees the reliability of the information.
Thanks to forecasting, companies can automate and improve their decision making. Artificial intelligence can also detect future consumer trends. Stores can then propose promotions based on their purchase history, but also on new customer behaviors. This gives them a considerable advantage over the competition.
Improving inventory management through promotion forecastingReceipt analysis is used to optimize promotions, and promotion optimization is used to improve a company's inventory management. Specifically, the information gathered from the purchase history is necessary to optimize storage.
Optimizing storage by controlling and anticipating promotionsAnticipating promotions and being able to determine in advance how many products will be sold enables a company to optimize its stock. There are many issues related to inventory:
- cost of storage;
- storage space;
- cost of inventories;
- storage management of sensitive goods;
Stock management is adapted to all situations: storing products in winter and summer, storing perishable or dangerous products, storing large items, storing items with a low turnover rate, etc. In each of these cases, storage costs vary as well as the characteristics of the warehouse itself. To lower overall storage costs, it is important to control sales and promotions.
To this list, we must also add the customer experience. Indeed, customers facing stock-outs are customers who have a bad customer experience and may decide to switch brands. Stock availability is one of the criteria to be taken into account in the customer experience.
Put an end to overstock and out-of-stock situations by optimizing your promotionsSales forecasting and promotion forecasting provided by machine learning set the list of products sold in advance. This means that businesses can know exactly what items will be sold, at what time of year, and in what quantity.
For example, stores can anticipate that back-to-school promotions will generate a certain number of sales. This way, they can plan for an appropriate stock level for all products. By anticipating this promotional campaign, stores are protected from a possible stockout. Also, they avoid having to deal with overstock issues.
The reason why AI predictions are so accurate is because they integrate different types of data. Indeed, the predictive intelligence platform needs internal company data, such as purchase history, but also external data.
The data needed to set up reliable forecasts for stock and promotions
Internal and external data are the two types of data used by the predictive intelligence platform. In fact, simply analyzing purchase history would not be enough to anticipate sales and therefore would not allow for accurate promotion planning. On the contrary, purchase history must be contextualized. Contextualizing purchases of products or services means putting them into context.
- In which geographical area were they made?
- What are the competing offers in the market?
- What is the buying power of prospects and customers?
- Do customers buy when it's raining or sunny?
- Do consumers come into the store after receiving an advertisement?
- What sporting or cultural event is held on the day a product is sold?
In short, to be innovative and efficient, a promotional strategy must be customer-centric and not product-centric. Using machine learning allows to understand precisely how customers make purchases. Thus, companies can offer them effective promotions on products or services that correspond to their needs and expectations.