How to successfully implement an LTO for your QSR
And how to dodge its challenges.
QSR Media spoke with Nigel Patient, Managing Director and Brand Strategist at Head Mark, to know more about his thoughts on ‘limited-time-only’ offerings.
QSR Media: What are the advantages of launching limited-time offers?
Patient: Limited time offers give brands the opportunity to entice customers into their stores to get a "value" deal and although its generally driven by price or a new product, they have the flexibility to remove the offer after a certain period of time, that way limiting the idea that the brand is only focused on price and also trying to give an instant push in sales.
QSR Media: What can you say about the tendency of sales to spike and then slip after the launch of a limited-time only offering?
Patient: Generally a LTO does exactly that, sales spike but once the offering ends people go back to their habitual behaviour, unless its focused on a new product launch where you might end up using it to test the success of a product which then becomes a real hit and customers desire can then force a QSR to add this new product to their menu.
If a brand does a good job they will have in place strategies that once customers visits there is an element that starts a continued communication with that customer, to keep them coming back!
QSR Media: What can you say about the holding power of these offerings?
Patient: Whilst these can create a spike, the return rates tend to drop dramatically. It, however, depends on the approach, if you have a continued strategy to launch new things/products then the brand is seen as having something new or fresh to encourage people to come back.
If it's only based on price then those price sensitive customers will move freely to the next location once the deal has finished to get the next deal.
QSR Media: How effective are these offers as a marketing opportunity?
Patient: There is definitely a place for this in the marketing mix, launching a new product to your customer base with a limited time offer is a great way to test out a new taste or flavour.
It can give customers a reason to visit a store that they haven't visited in a while and if the experience is a good one and there are other marketing tools activated it can provide customers with a reason to return.
If used purely on price, it’s most likely to inject a short terms sales spike, but could affect the brand perception in the long term – it really depends what the core benefits of the brand in question are if they are price based then there is an argument for using this effectively.
If it’s not based on price then you are actively asking customers to start comparing your brand on price and this can become dangerous.
QSR Media: What are the disadvantages of launching these offerings?
Patient: As mentioned above, using limited time offerings encourage people to visit during this period purely based on the limited time offering and not on the experience with the brand.
This means the success is normally short term and doesn't focus on building a longer term relationship with the brand which ultimately leads to customer retention.
QSR Media: What challenges are often encountered when launching these offerings?
Patient: This all depends on the execution, you have to be careful not to just launch something to your existing customer base in a store environment as you'll eat into existing product categories or current average spend.
It has to be done outside of the customers standing in front of your store in order to increase foot traffic and attract new customers.
It can also mean that you change the perception of your brand in an instant, you might be attracting more customers but they may be the "value based" customers which might actually discourage some of your existing customers from visiting.
It’s a slippery slope that needs to be strategically planned. There are brands who do a great job with it and brands who damage brand equity so its important to know what the objectives are and measure these not just during the campaign but before and after it.
QSR Media: What do you think are the top three reasons consumers are getting more enticed by these offers circulating the industry?
Patient: Top 3 reasons would be:
• Uncertain economy and people watching what they spend, consumers now feel as though it's an expectation that they receive an offer before they spend because the industry is teaching them that
• Consumers need to have things instantly, so if it's there, they want it now…there is this continued desire to want to try new things, they don't want the same or boring, if a brand isn't evolving then they move on
• The impulse purchase where customers feel if there is a bargain they need to take advantage of it now and not miss out!
