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How to Run Profitable Programs
Whether you’re looking to clear out some slow-moving inventory, overcome a seasonal downturn in foot traffic, or have the biggest revenue Thursday on record, discounts and/or promotions can help drive the business metrics you care about most.
The first step of running an effective promotion is documenting what you want to accomplish. By having a clear objective, you’ll be better prepared to determine the type of promotion you want to run and how to promote it. Only you know what your business needs but here are some common objectives to consider:
Customer-based objectives will have a measure of success associated with customer acquisition, retention, or reactivation numbers. Maybe you want to bring in 20% more new customers in May than in April or increase the average order frequency of your “VIP” customers from 2 to 4 times/month. These measures can generally be tracked for success with your CRM and have the bonus effect of also bringing in additional revenue. Examples of customer-based objectives are:
Product-based objectives will have a measure of success associated with total units sold of a particular item. Maybe you have an excess of a certain flavor of potato chip bags that need to go to make room for another flavor. Or, maybe you’ve recently added pasta to your normal pizza line-up and want your best pizza customers to give the new menu items a try. These measures can generally be tracked for success with Revel’s Product Mix report or other inventory sales reports. Examples of product-based objectives are:
Time-based objectives will have a measure of success associated with total volume of revenue processed within a certain period of time. Perhaps you’re not on track to hit your sales goal for July or want to take advantage of the buzz of Small Business Saturday. These measures can be tracked with a daily/weekly/monthly sales report. Examples of time-based objectives include:
Once you’ve determined what kind of business objective you want to achieve, remember to set your measurement of success as a SMART (specific, measurable, attainable, relevant, time-bound) goal. Just saying, “I want to sell more,” or, “Let’s deplete the entire stock of tomato-based dishes,” isn’t going to be enough to measure against.
Examples of good goals:
There are almost infinite ways to offer and position price-based promotions. Here are some of the major ones to consider:
Volume-based discounts work from the principle that “the more you buy, the more you save”. This encompasses BOGO (buy one, get one free) discounts, as well as “Save 10% when you buy 3.” Essentially, any time you’re offering an incentive for purchasing a larger quantity, that’s a volume based discount. These types of discounts work well when you’re trying to drive up average order size or for moving a specific inventory item.
Dollar or Percent Discounts
These are generally deployed as coupons and offer a straight dollar or percent amount off an order. Think, “Save 15% on your next order!” or “$20 off any purchase greater than $50”. These can include conditions (certain dollar amounts or products purchased) but are generally presented as a way for customers to save on what they want to purchase. Coupons are generally good for customer acquisition and encouraging repeat visits.
A re-price discount replaces the price of a specific item for a specified period of time. An example would be, “All burgers are $6 on Tuesdays!” (if your burgers are normally $8). These work well to move specific inventory items and to acquire customers.
Once you’ve selected your type of discount comes the fun part – deciding how to position your promotion! Again, there’s an almost limitless number of ways to position a promotion. Here are some to consider:
A “VIP Sale” is a way to reward a segment of customers with a special offer. This type of promotion involves messaging a specific segment of customers with an offer. The offer can be time-bound or not, restricted in product or not. It’s essentially a way to drive repeat purchase and increase customer loyalty by rewarding those who have shopped with you in the past. Whereas the other types of promotions discussed should be promoted publicly, VIP promotions involve outreach to a limited group.
Take advantage of an air of excitement around shopping or deals and offer specials during the big “shopping” holidays of the year… or be the first to capitalize on a less popular holiday or occasion. Participating in Black Friday is almost table stakes at this point but you can also get creative. For example, your ice cream shop could get a nice boost by running a “Last Day of School” promotion in conjunction with the end of the school year in your local district.
Now you’ve got a killer discount in place and a great way to position it. What next? Now you need to get the word out! Depending on the type of promotion, there are a huge number of ways to make sure people know to take advantage of your offer. Here are a few to get you started:
In-Store & Window Signage, Bag Stuffers, Receipt Messaging
To promote an upcoming sale, using real estate that you already use to interact with customers to entice them to come back is a no-brainer. Think of all the things a customer takes with them when they leave and figure out a way to use it to promote your sale. Maybe it’s a flyer or coupon taped to the top of the pizza box or a special message printed on the bottom of receipt. You can also place signs near the register and entrances.
Are you using a CRM? (If not, you should be!) That means you’ve got a bank of email addresses at your disposal. By sending an email to customers who have visited before, you can encourage them to return.
Using your business’ Facebook/Twitter/Instagram page to promote a sale is another great way to further engage customers and prospective customers that are already engaging with you online.
Depending on your budget and geographical location, advertisements in the local newspaper or with the local radio station may prove fruitful in introducing your business to new customers. Alternatively, some local reporters/DJs may do a local business spotlight that would be free and could be considered part of your public relations outreach.
Looking for more ideas? Check out our Guide to Brand and Demand with more promotional strategies.
Now that you’ve effectively run your promotion, it’s time to dig in and see how successful you were. Remember the measures of success you set for yourself back in Step 1? It’s time to compare your actual results to the definition of success that you set out for yourself.
Use your business’ reporting tools to run some reports and check – were you able to sell more of that specific item? Were you able to bring in new customers? Did your overall revenue increase? If you’re using the Revel POS, the Product Mix Report and Daily Sales report may be helpful.
If you hit all of your objectives, pat yourself on the back; your promotion was a success! Think about all the things you did – the type of promotion, how you promoted it – and consider replicating them in the future.
Did you fall short? That’s okay; pat yourself on the back anyway because now you have a chance to learn some things about your business! Think through all the things you did – what worked? What didn’t? What can you tweak in the future to ensure your promotions achieve their objectives next time?