Increasing Sales with Add-On Purchases! #5 – Promotions

[Part 5 of 5]

This technique is so powerful that it is used by almost all retailers to various extent.

Unfortunately, it is often used with the wrong products, at the wrong time, or with poor planning Because of this, Promotions in many stores bring almost no long term benefits.

 “Promotions

We see them every day:

  • Buy X Get X Free
  • Holiday Sale
  • Buy 1 item, get the 2nd half off.
  • Buy 2 for only $X.XX
  • End of the year sale
  • Only $X.XX after X O’clock
  • Bring back your receipt and get 10% off
  • When you buy an item you want, you also get an item you didn’t want
  • and thousands of variations of coupons.

So lets start with the purpose of a promotion, because your goal in a promotion should always be clearly defined.  (“To increase sales”, is NOT a specific goal.  Obviously, everything you do is in order to increase sales.)  So here are some possible purposes for your promotion (all of which tie in with increasing your store’s profitability):

  • To build awareness for a particular item. (Possibly new item) 
    • This item should have a broad appeal for current/potential customers, a good retail, and a healthy margin.  Example: Buy a Limited Edition Reese’s, and Get a 2nd for only $0.50.
  • To get more customers to try a specific category in your store (ie coffee). 
    • Just like the individual item, this category needs to have a broad appeal for either current and/or potential customers, have a good retail, and have a better than average profit margin.  Example:  Freshly brewed coffee only $0.99 for a limited time. Or, free donut with every coffee purchased.
  • To temporarily or permanently change a customers buying habits (getting them to your store instead of the competition) by offering a highly desireable product at cost, or maybe even bellow cost to ensure that you have the lowest price in the area (otherwise known as a “Loss Leader”)  This could be a short term fix since you can’t have the best price forever, unless you can offer those customers something else in your store that they couldn’t get across the street.
    • It is common to see promotions like: Corona 12pks only $10.99. or Milk Gallon $2.99
    • This SHOULD be a product that brings in customers you didn’t previously have (vs giving a discount to your existing customers) and this should be a product that generates a lot of additional sales.  For example, if your store is a destination for salsa there is a good chance that you will see a dramatic increase in chip sales.
  • To get existing customers to purchase more of an established product, works best with “Sin” products.  This works because of the nature of a sin product consumer: if they have more product on-hand, they will consume more.
    • Example: Get one more pack of cigarettes with a $0.70 discount. 
  • To get existing customers back into your store a 2nd time later that day.  (For stores with strong morning/lunch traffic, but no evening traffic)
    • Example: $0.99 hot dogs after 3PM or Footlong sandwich only $5 after 5PM (Subway)

In Summary:  Your basic promotion goal categories are:

  • Get new customers into the store
  • Get existing customers to buy more of an existing product.
  • Get new or existing customers into the store during a slow part of the day.
  • Get existing customers to buy a new (more profitable) product/category.

REMEMBER: For any promotion, where your goal is to get additional customers into your store; if you don’t have the promotion advertised outside of the store, in newspaper, on the radio, or elsewhere external, you are probably just giving an unnecessary discount to existing customers.

Once you have a clear goal, it is very easy to decide on which product should be promoted.  The product you promote should offer clear value to the customer.  If you are promoting an unknown brand, you will have to prove the value to the customer by either sampling the product or offer it at rock bottom prices.  This is the reason why most new item introductions fail.

Finally you need to decide on the time frame for the promotion.  I find it best to keep promotions other than “loss leaders” for no more than 1-2 months or it no longer seems like a special deal.  Generally speaking it’s best to keep this part flexible as it depends greatly on the results of the promotion.  Which brings me to the other integral part of running promotions:  Tracking the results.

Whenever you run a promotion, you should set it up in such a manner that you are easily able to track the results either on a daily or weekly basis.  This is crucial for the success of the promotion and the profitability of your store.

Final note:

I would not recommend having more than two “loss leaders” at any one time.  Most stores would do best with just 1, as that would be enough to give their customers a feeling of value.  The key is proper advertising.

If you would like to increase your sales and profits by maximizing the opportunities in your store, please contact me for a FREE email consultation at:  c-store-expert@greatconsult.com

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