Looking past the past: Designing promotions that outperform last year

Last Year-itis, also known as the "curse of last year," is a common affliction in the retail industry. This is especially true when it comes to planning promotions. Retailers often get stuck in a pattern of running the same promotions, season after season and year after year.

Why is Last Year-itis so common for promotions? Because retailers need predictable outcomes in order to create accurate forecasts and plan accordingly. And when you've already run a promotion in the past, you can pretty well guess how it's going to perform the next time around.

But Last Year-itis has some typical side effects that can be detrimental to the health of your promotions strategy. Retailers are often evaluating promotional performance based on a limited or incomplete view. So, what may look like a successful offer may actually have negative impacts that go unnoticed.

And without that comprehensive promotional performance view, Last Year-itis is just like a seasonal cold or the flu, coming around again and again.

However, gaining insights into more holistic outcomes of promotions is easier said than done. Revenues and units sold are simple enough. But harder-to-see outcomes like cannibalization and stockpiling can hide negative profit impacts behind rosy sales results. Conversely, without effective analytics, retailers almost certainly miss opportunities to activate affinity purchases across the assortment.

The good news is that there is now a cure. Analytics and AI technologies have evolved to allow retailers to confidently design and accurately forecast new offers that lead to positive outcomes for the business as a whole. And it all starts with comprehensive impact measurement.

The Cure for Last Year-itis

In our recently published guide to creating more-effective promotions, we describe how new tools available to pricers can help them break the cycle of Last Year-itis and develop offers that outperform those of previous years.

The guide covers five steps retailers can take to leverage more accurate and comprehensive promotions performance measurement to improve promotional strategies. These five steps are:

1. Open your mind to new possibilities.
2. Balance conflicting objectives by adopting a holistic view of every offer.
3. Be ruthless with underperformers.
4. Reevaluate how you use vendor funds.
5. Take full advantage of everything modern science has to offer.

Let's take a deeper look at the first and arguably most important step: opening your mind to new possibilities.

Breaking the cycle

First and foremost, breaking the cycle requires change and, to some extent, risk. Whether we're talking about pricing or any other area of the business, change always starts with challenging current perceptions, expectations, and patterns.

That's why having an open mind to the possibilities is crucial to improving promotions. As recent advancements in data science allow you to dive deeper into comprehensive performance metrics, you may find some long-accepted practices no longer provide the best outcomes.

Maybe cannibalization numbers show an offer isn't as profitable as was once believed. Or perhaps analytics will reveal an often-repeated vendor offer requires more funds to provide value. But unless organizations are willing to embrace the data and try something new, those insights alone can't improve results.

We understand that addressing these long-standing perceptions is difficult. Changing entrenched traditions requires having confidence to ask new questions and seek detailed answers. Trusting that new technologies will generate accurate, reliable recommendations that balance market share, margins, and price perception will take time.

But, while the technology may be new, Revionics' experience is not. The combination of our decades of deep retail pricing expertise and advanced AI models gives us the confidence to say that with the right partner and the right science, you can accurately forecast for new and more complex offers and generate even better results.

And because the numbers don't lie, your trust will quickly grow and the business will follow, with the results you achieve becoming the lasting cure for Last Year-itis.

More steps to improving promotions performance measurement

For more information on steps 2–5, download our free guide, "Retail Promotions Performance Analytics: The Cure for Last Year-itis." And if you're ready to take the next step in the promotions optimization journey, take a look at what sets the new Revionics Promotions Planning and Optimization solution apart from other tools on the market.