Good ol’ limited time offers – most commonly referred to as LTOs – are probably one of the oldest tactics known to a marketer. When executed correctly, the perceived scarcity created by these offers can create urgency among customers, build a loyal following, boost brand excitement, attract foot traffic and most importantly, drive sales up. On the downside, these promotions can also unjustifiably waste marketing and operating bucks if the strategy and execution is flawed.
LTOs have recently found an acclaimed place in the food industry with some clear standout items that generate a lot of buzz year after year. These offerings have become ubiquitous to the point that some sort of special has come to be expected from consumers at all times. Yet the question remains: what exactly makes some of these items rise to superstardom while others simply fall into oblivion?
Seasonality seems to be the common denominator of most successful LTO items. mcDonald’s Shamrock Shake celebrates St. Patrick’s Day in march and Starbuck’s Pumpkin Spice Latte (PSL) rolls out every fall with an almost cult-like following. Both of these items capitalize on the excitement for key times of the year. Sam Oches, editor at QSR magazine, thinks that it makes sense for seasonality to drive LTO implementation: “Consider Starbucks’s Pumpkin Spice Latte. It comes out right as everyone has pumpkin fever, and with pumpkin on the mind, consumers go gaga over the drink.” Oches adds, “Consumers love nostalgia, and seasonal menu items are a great way to create that nostalgia, so it only makes sense to leverage that by making your LTOs seasonal.”
The mcRib from mcDonald’s is one of the LTO exceptions in terms of seasonality. The mcRib has become an ever-fleeting item that keeps customers guessing when and where they can find the sandwich, which explains the second requirement for a successful LTO – scarcity.
Perceived scarcity can have a psychological effect on consumers. It translates to the idea that the harder it is to get something, the more valuable it must be. The tricky part is to develop an outstanding product that can keep customers coming back for more. After ten years of Pumpkin Spice Lattes, Starbucks says it has sold more than 200 million, which can approximately equate to $80 million in revenue a year. Could the revenue have been higher if the PSL had been available all-year-round? Not likely, since its scarcity is basically what creates PSL’s loyal following and single- handedly drives sales up for the company every fall. Without this scarcity the drink may lose its value, leading to decreased sales over time.
Revenues aside, what clearly separates epic LTOs in the industry from mediocre ones is the buzz they create. Starbucks has successfully ingrained PSLs into the minds of consumers at the beginning of fall. In September and October references to the hot beverage with hashtags, memes, posts, shares, tweets, pins and posts on Instagram, Vine, Snapchat and Tumbler, and other social outlets are both frequent and commonplace. mcDonald’s mcRib alone has a Facebook page with 34,359 followers and has prompted consumers to create websites and groups dedicated to locating stores where the sandwich is available. Scott Stratten, marketing consultant and author of un-Marketing, expressed in inc. magazine’s article “The mcRib’s magic marketing Sauce” that “thanks to social media, the voice of your customers is louder than the voice of the company.” Social media has made word of mouth more important than ever, increasing the value of providing a shareable experience. Most successful LTOs accomplish this by developing creative offerings that are on trend with consumer demand.
Creativity is at the core of many LTOs since innovative offerings are what draw consumer attention. The Cronut® will be a case study for businesses everywhere on how to accomplish this: daring to combine two popular desserts while never compromising one bit of quality. LTO menu additions won’t create buzz in the industry unless they offer a new experience for consumers in the flavors and textures they provide. When developing these products, consumer excitement should always be taken into account – which may require some businesses to stop playing it safe and dare to think outside the box.
Seasonality, scarcity, creativity and buzz in social media are all important factors for establishing successful LTOs – yet how companies determine the right LTO mix and the appropriate leverage can make all the difference. With any tactic, there is always a cap on the number of limited time offers that a business should offer during a year, especially if they aren’t being fully capitalized on.
“I don’t think LTOs have been overused, but it’s possible they just haven’t been leveraged as well as they could be,” Oches shares. “There is certainly such a thing as too many LTOs in a year – one major burger chain’s decision to release entire LTO menus in the last few years was peculiar – but so long as the LTO responds to consumer demand or new consumer trends, and it is properly supported with marketing materials, I think it’s fine ifa chain does a few throughout the year.” He adds, “Wendy’s year in 2013 is one good example of properly investing in multiple LTOs. It released its flatbreads… then the Pretzel Bacon Cheeseburger, and then some additional sandwiches later in the year. All of them, for the most part, were successes, with the Pretzel Bacon Cheeseburger being especially popular. The reason they all did well is that they were innovative, on trend, and had the proper support to give them a chance to thrive.”
Successful LTOs take advantage of key times of the year that may generate nostalgia, and although it may take some time, they can come to be part of those special times of the year given enough consumer response and long-term commitment from the company. Additionally, scarcity, while it may seem counterintuitive in some instances, can drive revenue up as long as the consumer knows and seeks the product. Success can also be measured in brand awareness and brand loyalty, priceless objectives that every enterprise aims to attain.