Preferential Marketing for strategic growth

Preferential marketing growth refers to a business strategy that prioritizes and tailors marketing efforts towards customers with specific preferences, behaviors, and characteristics to drive rapid growth and retention. It involves using data to understand these preferences, developing personalized customer experiences through targeted campaigns across various channels, and continuously experimenting and optimizing strategies to foster customer engagement, loyalty, and higher lifetime value.

The goal is to present consumers with compelling offers and tailored, resonant messages at the right time. Today’s customers want more of this. As previous McKinsey research revealed, 71 percent of consumers expected companies to deliver personalized interactions, and 76 percent got frustrated when it didn’t happen.1 When companies get it right, however, they can create significant value.

Companies often deploy tactical, manual, and stand-alone solutions to engage their customers. But retailers are now entering a promising new era of personalization. To reach consumers where they are and how they want to be met, marketers can embrace two powerful innovations: AI-driven targeted promotions, and the use of gen AI to create and scale highly relevant messages with bespoke tone, imagery, copy, and experiences at high volume and speed.

Moët Hennessy has launched The Privileged Moment, an ultra-personalised experience exclusively for premium shoppers in travel retail.

Offering access to the maison’s “most harmonious cognac” Hennessy Paradis, the experience is exclusively open to designated ‘Very Important Clients’ (VIC) by invitation only.

Inside a dedicated sensorial space, guests are invited to unlock the handcrafted oak Cabinet of Curiosity trunk, using bespoke keys, to reveal a glorifier containing Hennessy Paradis.

The space puts a spotlight on the craftsmanship of the brand and the maison, with grapevine illustrations, copper stills and eaux-de-vie samples. Throughout the experience service rituals are deployed to create an exclusive experience, with curated pairings of accord-mets, as well as fine glassware and dedicated storytelling to bring the heritage of Moët Hennessy to life.

“For a select few, a hidden compartment within the trunk holds a surprise tasting of one of Hennessy’s most exclusive expressions.”

For both companies and customers, the old way of managing promotions—blunt offers to large groups of people—is no longer cutting it. Retailers face pressures due to economic uncertainty, changing consumer preferences, and, in some cases, declining profits. Meanwhile, previous McKinsey research suggests that 65 percent of customers see targeted promotions as a top reason to make a purchase.

Many retailers view AI and gen AI as a way to reverse the downward trends and accelerate growth. An increasing number are starting to experiment with AI to improve mass promotions. But companies can be more strategic by employing AI for targeted promotions, using data to tailor discounts based on people’s shopping preferences or their affinity for different types of offers (see sidebar “What customer segmentation can look like”). With a more granular approach to customer segmentation, retailers can craft promotions that target specific customer life cycle stages (such as new-customer acquisition, customer retention, repeat purchase, or risk of churn) or specific business objectives (such as promoting a particular brand or category or encouraging cross-selling).

In a world saturated with promotions, companies can use targeted offers to stand out. Retailers that get this right can help ensure a better shopping experience while also enjoying better margins from saving on promotional costs and fueling more conversions. Ideally, marketers can develop a program of targeted offers at scale that accomplishes the following: Applies business rules and algorithms to determine offerings and timings of delivery; Builds flexible, fit-for-purpose coupons (such as tiering discount rates so that those who buy more save more, limiting usage to certain categories or time periods, or designing offers that include or exclude certain premium categories or brands); delivers targeted promotions through all available marketing channels, such as through a company website or app, push notifications, text messages, or emails: activates personalization with an always-on cadence where relevant accompanies offers with clear, highly relevant communications, such as with dynamic recommendations that update in real time for individual customers based on their purchasing or browsing history

With this variety of targeted offers, marketers can create a seamless omnichannel experience for customers, in which they receive targeted, streamlined promotions without conflicting or overwhelming information from other places. Companies should be smart about how much margin they’re giving away when and where, encourage specific objectives rather than overly broad ones, and ensure that promotions are offered at the right time to the right people (see sidebar “How one retailer unlocked growth by launching targeted offers”). From what we’ve observed, companies that push incremental sales through targeted promotions can see a 1 to 2 percent lift in sales and a 1 to 3 percent improvement in margins.