How the Financial Times drives customer growth with innovative promotions

Customers love discounts. But relying exclusively on discount promotions for growth can be risky because they are costly. For premium brands, they can also negatively impact brand perception.

That’s why the Financial Times (FT) recently assessed their discount promotions. They wanted to better understand promotion dynamics and perceptions to optimize promotion strategies for long-term ROI.

What promotions could the Financial Times use to gain subscribers while preserving brand image and building lasting customer relationships?

At the EPP GLOBAL FMCG/CPG Revenue Growth Management Forum, Promotions Strategy Manager, Arthur Hobhouse, shared the Financial Times’ journey to evolve their promotion strategy and mechanics. Ricardo Rodrigues, SKIM RGM Senior Manager, explained the research framework and simulation tools that delivered surprising customer insights and actionable promotional recommendations.

For brands interested in discovering the right promotional strategies to achieve their goals, the Financial Times’ story is eye-opening. Read on to learn more about the presentation.

The Financial Times’ challenge: Optimize promotions for share & ROI

For the past few years, the Financial Times has attracted new audiences and grown their subscriber base by using price discounts. But performance was weakening.

“There was a concern that discounts were impacting trade performance and conflicting with our premium brand positioning.”

Arthur Hobhouse

The FT embraced this opportunity to discover new promotions that could achieve their goals:

• Attract new and potentially more valuable audiences
• Make a positive impact on brand image
• Build long-term customer relationships

They also wanted to learn how different promotions affected consumer perception. Specifically, do price promotions train potential customers to expect a discount? And are there factors that can change the way customers view promotions?

The FT turned to SKIM to help them understand the promotional landscape and choose a strategy with the highest chance of success.

The solution: Uncover consumer preferences & simulate promotion outcomes

To focus this initiative on the consumer, it was important to understand how consumers choose, and how factors could influence this, including occasion, preferences, channels, demographics, and more. To build the best promotion strategy that answered these questions for the FT, SKIM developed a plan to answer questions about consumer promotion preferences:

• What types of promotions do customers like best?
• When are promotions most effective?
• How do consumers trade off among promotion types?
• In which channels would promotions have the most impact?

SKIM developed 4 survey modules to test consumer responses to 67 combinations of promotion mechanics, prices and payment terms for 2 FT subscription products:

1. Attraction: The intuitive appeal of the promotion
2. Conversion: How the promotion performs in a competitive decision context
3. Subscription: Does the promotion encourage subscription behavior?
4. Affinity: Does the promotion improve or damage relationships and value perception?

“SKIM used its Unspoken mobile-first survey methodology to capture the reactions of consumers in 9 markets around the world. We tested 4 types of promotion mechanics, ranging from discounts to bundling, partnership offers, and merchandise.”

Ricardo Rodrigues

The benefit of using these different survey modules is to essentially capture the dual nature of decision-making: 1) fast, intuition-based choices and 2) slower, more deliberate and logical choices. The nature of promotions combines both emotional and rational elements, and the two Unspoken exercises – both the attraction and conversion modules – tested these facets of decision-making.

Through several swiping and trade-off tasks, consumers reveal their interest in the promotion’s mechanics and what competitive options they would replace.

The results of the survey were uploaded to a simulator, where SKIM tested thousands of scenarios, varying the mechanics, payment terms, and portfolio items.

The insights: What promotions do consumers value?

Here’s the part that was expected: the top performing promotions were discounts, in every region and with every type of customer. But it was important to know why, to improve their effectiveness for the FT:

• Discounts are simple to understand
• They make products more affordable (especially when competitors are heavily discounted and even free)
• Discounts provide the perception of greater value for consumers

But SKIM also discovered something surprising: consumers also value bundles. By designing the right bundles, with the right product matches, we have a new and powerful way to attract customers.

“The FT Weekend was the most popular bundled option. It offers a lot of additional value to our customers rather than being a substitute for our core subscription.”

Arthur Hobhouse

The next step was to factor in variables such as cost of promotion and churn, to obtain the ROI of a promotion mechanic. That’s where SKIM’s powerful simulator proved invaluable. The tool allowed the team to test not only the individual combinations of product, price, promo, and payment term, but also showed the outcome when two combinations are available at the same time.

The simulator projected which “portfolio” of products and promotions would generate the most share and revenue.

“Price discounts generate more volume but relatively less revenue. When we looked at the best scenarios, we saw that the price discount is no longer the top promotion mechanic.”

Ricardo Rodrigues

The research revealed that the intro offer works best overall, followed by the product bundle. While discounts are still important at number 3, they work best when paired with an annual payment term that locks in the consumer for a longer period. SKIM also uncovered different top performers in specific markets, such as sampling in the UK and cashback in Japan and New Zealand.

The FT is validating these findings by testing their top promotional opportunities in a pilot.

Reinventing promotions: 4 takeaways for brands

Every brand is looking for ways to offer the value consumers want without relying on expensive discounts. SKIM’s research showed the Financial Times how to achieve higher share and ROI while minimizing discounts.

Here are some recommendations that can help your brand learn what consumers value and why:

1. Test brand-specific promotion strategies. Not every brand in your portfolio will benefit from the same promotion mechanic. For example, a bundle could encourage trials of a premium brand without eroding its image.
2. Mix and match promotion mechanics. Apply different promotion factors based on different occasions, seasons, time of year and events through special or seasonal SKUs.
3. Reduce discounts within limits. While discounts are powerful and may still be necessary, it’s recommended to limit the depth of these discounts to avoid diminishing returns.
4. Factor in regionality. Remember that consumers in different markets place different values on promotional mechanics. Explore what performs best in each of your regions.

Do you know which promotions will drive long-term customer retention and deliver ROI? 

SKIM can help you discover the highest-value promotional opportunities for your customers and your brand.

To craft a smart promotional plan, be sure to incorporate the voice of the consumer, while reducing the use of discounts to find innovative ways to attract customers and build loyalty. If you’d like to learn more, schedule a consultation with one of our experts.