Discount fatigue – the new Grinch of the holiday season

THE stakes are high for Singapore’s retailers this holiday season, where big sales may no longer translate to big wins. On one hand, retailers are scrambling to outbid each other to finish the year strong but on the flip side, budget-conscious consumers aren’t inclined to splurge, not least as the constant stream of mini-events and deals throughout the year has dimmed the allure of holiday shopping.

Discount fatigue has become the new Grinch of the holiday season, and competitive pricing alone is no longer enough to get consumers to take out their wallets. According to a survey conducted by Twilio at National Retail Federation’s 2024 Retail’s Big Show Asia Pacific, 53 per cent of retail businesses in the region are currently struggling to demonstrate value beyond price, in the quest to win over browsing customers.

With customers tightening their belts rather than splurging during holiday sales events, how should retailers adjust their approach when the pull of instant gratification is no longer as strong?

Twilio’s latest State of Customer Engagement Report (SOCER) provides some clues as to what consumers are looking for.

Connecting the data dots to craft exceptional customer experiences

Businesses in Asia Pacific are facing a significant gap in customer experience. Some 82 per cent of Singapore businesses say they provide “good” or “excellent” customer engagement, yet only 62 per cent of consumers agree.

Brands may be pouring resources into creating customer experiences across appropriate channels, but without collecting and unifying the necessary data, it’s all just guesswork.

During the holiday sales season, the lack of data-driven insights can have a direct, negative impact on ROI (return on investment) and lead to missed sales opportunities. While retailers are focused on driving purchases during peak shopping periods, a lack of clear understanding of customer behaviour can cause these critical moments to slip through the cracks.

There is an urgency for brands to reevaluate and align strategies with customers’ perceptions and make an effort to fully understand their customer base. This would require strengthening the foundation of their data strategy with a unified system to collect, analyse, and act on customer data in real time. This should include dark data – the untapped valuable insights stored in company systems. If left untouched, dark data can create fragmented and inconsistent insights into customers, their journeys, and how a business should interact with them. This can lead to significant investments in systems that inadvertently provide misleading information.

Valuing real-time engagement over discounts

Personalisation is even more critical when interacting with younger generations. Almost seven in 10 Zoomers and Millennials globally would stop using a brand that doesn’t deliver personalised experiences on their preferred channels. Additionally, more than one-third of them will abandon a brand that doesn’t engage with them directly in real time.

Retailers can only boost engagement by truly understanding their customers. This deep understanding enables businesses to tailor their strategies and interactions, so that every touchpoint adds to the customer experience. Beyond engagement, this unlocks significant business value – reducing returns, minimising cart abandonment, and encouraging more browsing. It also creates relevant opportunities for upselling and cross-selling, driving higher conversion rates and stronger customer loyalty

One best practice is to build golden customer profiles – comprehensive records that consolidate preferences, purchase history, demographics, and interaction data across sources into a unified view. By integrating these profiles with automated advertising platforms, retailers can deliver highly targeted ads that make customers feel seen and heard amid the holiday season’s promotional overload.

AI : A gift that keeps on giving for retailers this holiday season

AI tools can make all the difference for brands that have unified data but are still struggling to activate it effectively. Beyond basic recommendations, AI gives retailers the capability to deliver real-time offers and discounts, notify customers about products they’re likely to love and send tailored messages at the optimal time and place for maximum impact.

Deploying AI-powered personalisation correctly can unlock new levels of customer engagement and business impact. According to SOCER 2024, 57 per cent of Singapore customers are willing to spend more money for a customised experience, while 50 per cent have made a repeat purchase from a company based on the level of personalisation they received.

The beauty of AI is that it can help teams generate ideas, copy, and ultimately campaigns in a fraction of the time. This is very handy in the lead-up to sales periods and Christmas, when retailers are trying to do as much as possible in a small amount of time.

Retailers can create more precise, predictive audiences out of the box, trigger timely journeys, and personalise experiences based on a customer’s predictive lifetime value. This means precious internal resources are being directed to the areas that will make a real difference.

For instance, online auction platform Trade Me used predictive AI models to forecast buyer and seller behaviour. This enabled them to execute more targetted, timely, and personalised campaigns, all without requiring dedicated resources from their data science team.

One thing is clear: As discount fatigue sets in this holiday season, retailers must deck their halls using more innovative approaches that prioritise personalisation, experience, and customer connection. By making data-driven personalisation a top priority – beyond merely offering discounts – retailers can create more engaging, memorable experiences that drive customer loyalty and set the stage for success long after the holiday season.

The writer is regional vice-president for Asia-Pacific at Twilio Segment