Promotions are a great way for retail stores to attract new customers, move excess inventory, and increase sales and profits. However, poorly planned promotions can actually lose money for a business. Follow this guide to help ensure your retail promotions are profitable.
Know Your Goals
Before planning any promotion, be clear on your goals. Typical retail promotion goals include:
- Increase store traffic
- Generate excitement/buzz
- Sell more of a specific product
- Move out of season merchandise
- Reward loyal customers
- Acquire customer email addresses and other data
Whatever your goals, identify them upfront so you can tailor the promotion appropriately.
Choose the Right Promotion Type
Common retail promotion types include:
- Percentage discounts – e.g. 25% off all dresses
- Fixed amount discounts – e.g. £10 off purchases over £50
- BOGO (Buy One Get One) deals
- Bundle discounts – e.g. buy a phone and get a discounted case
- Free gift with purchase – e.g. free umbrella with coat
- Contests and sweepstakes
- Loyalty programmes – rewards for frequent customers
Consider which promotion format will work best to achieve your goals. A BOGO promotion might work for cheaper stock items or items you want to clear, whereas a percentage discount could be better for high-end merchandise.
Time it Strategically
Timing is critical for profitable promotions. Avoid running promotions during peak seasons when demand is already high. Discounting deeply could eat into profits. Promoting too frequently will dilute their impact and train customers to only buy on deal. Instead, strategically schedule promotions to boost sales during slower periods or to introduce new products.
Promote the Promotion
Don’t just roll out a promotion and expect customers to magically know about it. Actively promote it via:
- In-store posters, signs and displays
- Social media posts and ads
- Email blasts to your subscriber list
- Newspaper/magazine ads
- Web banners on your site
Promoting the deal widens its reach so more customers can take advantage of it.
Analyse Results
After running any promotion, analyse the results. Key metrics to evaluate include:
- Total sales during the promo period vs. previous periods
- Total profitability after accounting for discounts
- Number of new customers acquired
- Specific product sell-through rates
This post-promo analysis helps you understand what worked and what didn’t. Apply these learnings to tweak and improve your next promotion.
Use Retail Promotion Management Solutions
Sophisticated retail promotion management software like Retail Express can streamline planning and analysis to boost the profitability of deals. Key features include:
- Centralised promotion planning and tracking
- Flexible discount and deal configuration
- Purchase analytics and promotion reporting
- Redemption tracking
- Customer segmentation and personalisation
- Email and messaging capabilities
With these tools, retailers can tailor promotions for different customer groups, quickly set up complex multi-tier deals, and easily monitor results. The data and insights provided by the software allow retailers to continually refine their promotions for greater success.
By following these tips, retail stores can get the most out of their promotions in terms of increased sales, customer acquisition, and profitability. Planning carefully, choosing the right promotion vehicles, promoting the deals actively, and analysing results can help develop winning promotions and avoid costly misfires. Retail promotion management technology further optimises the planning and execution process for maximised returns.
