Walmart announced that members of Walmart+, its membership program that combines in-store and online benefits, will receive 25% off any Burger King digital order every day. In September, members will also get a free Whopper every three months with any purchase. This is yet another example of a creative discount to drive consumer behavior in a specific customer segment.

    “Offers” similar to the Walmart+ example come in many forms and should prompt careful analysis for measurable benefit.

    Reference: https://corporate.walmart.com/news/2024/08/22/walmart-plus-launches-first-ever-dining-benefit-with-burger-king

    All rights to the logos, pictures illustrated here are retained by Walmart+ and Burger King, and their use is strictly for illustrative purposes.

    Examples include                           Question

    Free trial                                        How will this drive conversion to current use for a specific segment?

    Limited Time offer                      Did this drive sales performance?

    Introductory offer                       Did we hold the customer longer term?

    Captive incentive                         Did the barriers to exit increase retention in the target segment?

    Volume discount                         Did we achieve growth at target accounts and was it profitable?

    Bundled Offer                              Who experienced the benefit of the bundle? How did we measure?

    Bundles are tricky from multiple perspectives

    In most cases, offers should be targeted to a specific customer group, time fenced, and measured for impact. With something as simple as a short-term discount (20% off this week) the measurement is simple. We either see it on the sales tape or we don’t. The timing is defined in the offer and our biggest hurdle is understanding who exercised the offer and did we maintain sales for a longer-term benefit.

    With bundles, it becomes more complex, and the following are a few of the more challenging aspects:

    • What is the value of the bundle from the target customer’s perspective?
    • How do we charge for the bundle?
    • How do we measure impact?

    When setting Pricing Strategy, there are 4 elements that should be considered:

    1. The value of your offer (as perceived by the customer)
    2.  The competition and the price of their offer
    3. The costs that you incur to provide the offer
    4. The macro environment and its impact on the value chain associated with the industry

    What is the value?

    ” Fries with that” in a meal is a simple example. The customer opts in for the package and obtains a discount over the full price of the components. The customer gets a discount, assuming they wanted all the components, and the fact that the customer accepts the offer is indicative of value. For the sake of this discussion, let’s assume the offer cannot be separated and the customer can see the value. It will be the supplier’s job to determine what discount rate will cause the customer to opt in, but the math will be relatively simple.

    What do we charge?

    Do not listen to comments like “industry standard”, “rule of thumb” or similar heuristics. Charge the least amount that will drive a change in customer behavior. This might take research or trials to define but the objective is to provide the customer a benefit that meets our defined needs for adoption and profitability… again, do the math.

    How do we measure impact?

    In the fries’ example, we could look at tactical components such as more orders with fries, larger ticket sales, or increased profit per order. We would also like to understand whether we are experiencing increased store traffic and potentially even longer-term benefits such as increased fry orders even after the offer is closed. If a simple bundle is time fenced, we can assess these questions with an understanding of our starting hypothesis and data-based analysis.

    But this is a simple example.  For Walmart+, how will they assess the benefit of a collaboration with Burger King. What is the Walmart benefit? What is the Burger King benefit? How will they measure? How will they share the benefit? To whom does the customer attribute the benefit?  It is not enough to offer the customer a good deal, how will it be measured for business benefit across both organizations?

    What can we learn?

    We are constantly experiencing discounts, offers, and bundles of all types as suppliers drive for a change of behavior. As we take that learning to B2B markets, we must consider the fundamentals that will drive business performance.

    1. Is this offer targeted at a specific customer segment that we value?
    2. Is it time-fenced?
    3. Do we know the value of the offer from the customer’s perspective? Can we explain it? Can our team (including distribution)?
    4. Do we have a hypothesis of the value for us extending the offer? Do we know what we wish to achieve in the near term and long term?
    5. Have we defined how we will measure business benefit? Do we have the systems and skills to do so?

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