When it comes to a retail strategy to boost business, promotions are a sure-fire winner. Promotions offer customers extra value – essentially either in the form of a lower price, or by getting more goods for the same price.
Used by retailers across all segments, there are multiple promotion types, which deliver a range of benefits in sales, customer experience, loyalty and market share. It’s no wonder that a significant number of retailers see promotions as a top priority when it comes to retail strategy.
Here we look at the benefits of promotions, the range of promotion types, and the retail technology that powers effective promotions.
The benefits of promotions
Promotions offer a host of benefits to a retail store, including:
- Increase sales – the most obvious reason to run a promotion is to increase sales, using the promotion to cross sell up sell to generate more revenue. A promotion can entice people into the retail store (whether brick and mortar or ecommerce), increasing the chances of them buying other items as well.
- Attract new customers – a promotion can give a shopper a reason to try out a retailer they haven’t shopped with before, expanding the retail store’s client base.
- Fast start/Market share – a promotion can be used as a ‘fast start’ to rapidly build market share for new product, or to win back share from competitors.
- Clear inventory – a promotion may be used to clear inventory that is moving slowly, recovering costs and freeing up warehouse space for new, faster-moving products.
- Create differentiation and awareness – imaginative promotions can create a customer experience that sets a retail business apart from its competition, and keep it at the forefront of shoppers’ minds.
Capture customer data – if the promotion is tied to a loyalty program, or to the customer providing their details, it can be used as a valuable source of customer data. The data enables greater insights and further tailoring of future promotions.
Drives decision making – time-based offers use the scarcity principle to encourage vacillating shoppers to make a decision, knowing that if they don’t, they will miss out on the offer.
Promotion Types
Every promotion type is essentially an equation with two parts – Buy and Get. The Buy element has one or more conditions, and the Get is the shopper’s reward for meeting those conditions.
Promotion types fall broadly into three categories:
Discounts: a purchase that meets certain conditions attracts a discount – either expressed as a fixed amount or a percentage.
Free/cheaper goods – the classic Buy One Get One (BOGO) approach, including ‘buy one, get one free’ and ‘buy one, get one half price’.
Bonus buys (multi-deals) – the shopper buys a certain quantity of a product, and in return gets a discount off another product. Alternatively this could be a bundle, where two complementary products are offered for less than the sum of buying them separately.
Retail technology for effective promotions
Retail technology is the enabler for promotions that pack a punch – helping retailers to set up, manage, analyse and communicate their promotions.
A promotions engine integrated into point of sale – A good promotions engine will allow the retailer to set up a broad range of conditions and of promotion types. Retailers should look for a promotions engine that allows them to specify conditions of, for example, day/date/time, customer loyalty level, individual product SKU or product category, product brand, store or regional group of stores, number of items purchased, value of total sale, expiry data of the product, groupings of complementary products, and exclusions. They should be able to offer money off, free products, or a coupon or gift card for future purchases.
The promotions engine must be fully integrated into the retailer POS system, so that promotions are applied automatically when the customer checks out, online or in the brick and mortar store.
Retail Data Analytics – retailers need to understand which promotions will deliver maximum value for them. A sales trends report will help to find the times/products/customer types that need the boost a promotion offers. Once the promotion types are built and activated, a Sales Promotion report will clearly show the results, including anything that needs tweaking or adjusting.
Digital pass software – customers need to know about promotions, and one of the best ways to do this is to send information directly to their mobile device, using Digital Pass software. This complements in-store information about the promotion, and draws shoppers to the retail store.
Promotions are a great retail strategy to boost sales, market share and awareness, but need to be carefully planned and executed if they are to deliver on their promise. With the help of the right retail technology, retailers can implement a campaign of highly successful promotion types.
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