In retail, spending half of the annual budget on marketing isn’t unusual, it’s an investment. Major players like Costco, Apple, and Amazon relied on it to grow where they are now. So, all retailers need to have a budget allocated towards marketing. However, do not fall for “this is the only marketing strategy you need” or “data, data, and data”.
Successful retailers balance data-driven insights with creative approaches to maximize brand impact. After researching on most common marketing strategies that retailers spend half of their annual budget on, we found that top strategies incorporate both analytical and creative elements.
So, retailers have to experiment with various tactics before identifying the most effective ones. There are several options to work with but we’ll explore what are five marketing strategies that retailers spend half of their annual budget on in this post.
Five Marketing Strategies That Make 50% Of A Retailer's Annual Expenses
Retailers allocate nearly half of their annual budget to marketing efforts. That’s because marketing strategy investment is necessary to stay relevant. Marketing tactics build brand identity, engage customers, drive sales, and maintain a competitive edge. Check out the 5 most used strategies! By putting 10$ to each strategy, or going 50% on just one strategy, you can build a foul-proof and successful strategy for your retail.
Strategy 1: Digital Advertising For Boosting Visibility Online
Retailers are putting over 45-55% of their marketing budgets into digital ads. Also, short-form videos on Instagram Reels and TikTok deliver the highest ROI at 31% for brand visibility. Here are the benefits of digital marketing strategy for retailers:
- Digital ads can help get the most relevant audience. Google Ads also shows strong returns, bringing in about $6.50 for every $1 spent.
- Real-time metrics on apps help retailers assess ad performance immediately, tracking clicks, sales, and engagement metrics.
- It is more affordable than traditional channels.
Tip! In digital marketing strategy, adding SEO (search engine optimization) strategies will do wonders. According to research done on infographics In Digital Marketing, 81% of U.S. consumers rely on search engines to find nearby stores. So incorporating SEO can help when people search “XYZ store near me”.
Challenges to Look Out For:
This is like Word-of-mouth marketing, so here’s what you need to keep in mind when putting half of the budget into this tactic:
- Ad Saturation: With so many ads online, brands face the challenge of standing out in a crowded space. It’s called “ad fatigue”, you can deal with it by refreshing content. Make sure the same user doesn’t see the same ad more than 5 times.
- Privacy and Regulations: Privacy concerns require retailers to manage customer data responsibly.
- Rapid Changes: Digital platforms constantly evolve, meaning retailers must adapt to keep campaigns relevant and competitive.
Strategy 2: In-Store Visual Merchandising to Gain Instant Presence
Online sales are expected to make up almost 25% of total retail sales by 2025, but the other 75% are within stores in person. The majority of people make the “decision to purchase” items when they see the store. That’s why in-store visual merchandising is a powerful strategy. Based on studies, stores that prioritize innovative displays see sales increases of around 20%. Here’s why this tactic works:
- First Impressions Matter: Visual merchandising gives customers an instant impression as they step in. A well-designed storefront sets a positive tone that encourages further browsing.
- Showcasing Products Strategically: Effective merchandising makes products appealing. Organized layouts and thoughtful arrangements, like color-coded displays or neatly folded clothing, invite customers to interact with items they might not initially consider.
- Storytelling Through Display: Visual merchandising can also communicate the brand's story or theme. Seasonal window displays, for example, boost product engagement by 40%. This entices shoppers with a sense of relevance and connection.
- Increased Engagement and Impulse Buys: A captivating store setup keeps customers engaged, leading to longer visits. Engaging displays often inspire impulse purchases, especially when products are presented attractively and logically.
- Enhanced Brand Loyalty and Repeat Visits: It’s like getting curb appeal so people come out to your location and remember it. Memorable in-store experiences foster brand loyalty. Customers are more likely to recommend it to friends as well!
Tip! The only challenge in this is the budget. Retailers allocate 5-10% of their marketing budgets to visual merchandising. For luxury stores, this investment can be even higher.
Strategy 3: Social Media Marketing to Reach Many People at Once
Social media marketing strategy is one of the most effective ways for retailers to connect with a vast audience. Platforms like Instagram, Facebook, and Twitter don’t even require high expenses.
According to research, social media campaigns in 2024 have led to an average 10-15% increase in brand reach. So, many retailers are now spending 20-30% of their marketing budgets on social media marketing. Here’s why social media marketing works so well:
- Massive Reach: With billions of active users across social media platforms, these sites provide a huge audience that you can turn into customers. Your potential customers are already there, so it’s an ideal space to promote.
- Engagement: Unlike traditional advertising, social media offers real-time interactions. By responding to customer questions, addressing concerns, and even engaging in casual conversations, brands can get loyal customers.
- Targeting: Social media platforms allow for highly specific targeting. The algorithm promotes your products based on demographics, interests, and behaviors automatically. Therefore, your marketing dollars are spent reaching the most relevant audience.
- Content Variety: Social media supports a wide range of content like images, videos, blog posts, and live streams. This variety helps keep your audience engaged and interested.
- Local Reach: Influencer collaborations and user-generated content (UGC) further enhance the effectiveness of this strategy. Influencers bring authenticity and trust. Also, UGC allows customers to promote your products for you for free!
Tip! Hosting an event for influencers is a great way to make the most out of the marketing budget.
Strategy 4: Customer Loyalty Programs For Repeat Purchases
Many retail stores' main priority is long-term. It can only happen if there are repeated purchases, hence having loyal customers. Customer loyalty programs are more than just one-time transactions. They end up giving you a strong and lasting relationship with customers.
Retailers allocate 5-15% of their marketing budget to this type of marketing strategy. Here’s why loyalty programs are so effective:
- Repeat Business: Loyal customers are more likely to return for future purchases, which leads to steady revenue. According to an Accenture study, loyalty members also tend to spend 12-18% more per visit than non-members. They reduce the need for constant customer acquisition efforts.
- Word-of-Mouth Promotion: Happy customers act as natural advocates. They share their positive experiences with friends and family and bring revenue without extra marketing costs.
- Cost-Effectiveness: Keeping existing customers is typically more affordable than attracting new ones. With loyalty programs, retailers can get more profit with minimal investment.
- Valuable Feedback: Loyal customers are more inclined to offer feedback; good or bad. These insights can help improve your products or services. Getting better reviews online can help drive new customers.
- Higher Lifetime Value: A well-designed loyalty program encourages customers to spend more. According to statistics, 79% of Americans say loyalty programs impact their likelihood to keep doing business with a brand. So, it’s great for hanging around in the long game.
Tip! Start with points-based and tiered reward programs. Then, move on to subscription models and cashback as you grow. This way you’ll be able to build loyalty programs that are successful and increase spending. Limited-time offers and “bring a friend” work well as well!
Strategy 5: Data Analytics for Personalizing the Customer’s Experience
Let’s talk about data now. People think this is the most important strategy and are satisfied with online Data analytics as they reach targets. Yes, data analytics are a crucial marketing tool for modern retailers.
But only use it to get deep insights into customer behavior and preferences. It should be used to reveal who their customers are, what they purchase, and when. Then, retailers need to use this information to create personalized shopping experiences. Here are key ways data personalizes customer interactions:
- Tailored Recommendations: By analyzing past purchases, brands can suggest products that customers are likely to enjoy. For example, Walmart's “Customers Who Bought This Also Bought…” feature is powered by data insights. Even grouping items together can help further reduce cart abandonment.
- Personalized Emails: Customized emails, based on shopping behavior, offer relevant discounts or product suggestions. Retailers using automation tools can increase email open rates by up to 26% and boost revenue by 760%.
- Targeted Ads: Data-driven ad strategies target customers better. Also, customers are more likely to purchase when they see content aligned with their preferences online.
Tips for Maximizing Data-Driven Marketing! Instead of manual emails, try automated email campaigns. Also, investments in analyzing customer behavior, conducting A/B testing, and refining user experiences are key for optimizing this strategy.
Conclusion
All in all, retailers allocate a significant portion of their budget to marketing strategies for success. These tactics drive both foot traffic and online sales. The investment pays off by enhancing sales and market presence.
For any retailer aiming to build credibility and attract a loyal customer base, these five strategies are invaluable. Lastly, before you go make sure that you stay on top of trends and refresh your content marketing strategy to keep your audience engaged and loyal!
FAQs
1. Do all of the above-given marketing strategies work for all retailers?
These strategies are common in retail but need to be adjusted. Adapting them is important for best results depending on the retailer’s size, audience, and industry.
2. What is the cheapest advertising method?
Content marketing and social media posts do not cost much to get started with advertisements.
3. What is the rule of marketing budget?
A good rule is 10-20% for brand awareness, 10-20% for lead nurturing, and 60-80% for direct sales.
