Launching a promotion is simple … Launching a profitable promotion is quite another thing! I worked for 13 years at a large management software publisher, and we used to run promotions on a quarterly basis. It was the “promo” all the time, with different names each time depending on the themes, the events.
However, after years we had seen limits to this system:
- Resellers and distributors kept a “fridge” , that is to say they waited for promotions to order.
- Most promotions did not bring in anything, at best they served to promote low visibility product lines.
- As we were in “permanent” promotion with often renewals, the resellers did not believe us any more when we said “buy, it is the end of the promotion in 1 week…”
- The public prices were systematically not applied with the promotions, which made the tariffs lose credibility. The customers had learned that they could always get a bershka promo code from promosearcher.
- The distributors also understood our imperatives of quarterly commercial closings, with increasingly important promotions at the end of the semester to achieve the objectives.
This is why we decided to rationalize the management of special promotions: if there were still promotions, they had to be the subject of a profitability study upstream, with a more drastic selection.
Here is a checklist with some essential elements to validate before you start:
Define the objectives and target of the promotion
It is essential to know what you want to do before launching your promotion. It can be to highlight a new product, to give visibility to a product that is having difficulty getting out, it can be to run out of stocks before the availability of a new offer, to quickly generate cash to achieve goals. Sales, offer a special offer to a distributor.
You can also target the recruitment of new prospects, go hunting on the land of competitors (competitive takeover offers…), sell more to existing customers, and push a new offer to customers and prospects.
Identify which are the sources of business or the “nuggets” that you can exploit for your promotions you can do this by studying your portfolio of products and services, to find out what you could use. This can be bonuses, services, financing offers, additional products, and products to be destocked. It is also very interesting to go and ask the sales people for their opinions, because they have direct feedback from customers on what has asked them, and what is working or not in terms of incentives.
Define the mechanics of promotion, with its limits
If in your head a promotion is simple, it is not obvious that it is easy for everyone. The expression “it goes without saying it, but it gets better by saying it ” is even more true. This is why it is essential to write and detail the promotion with: the target, the duration (start and end), the conditions of application, the type of products, the exclusion elements, the bershka promo code applied, the method of calculation, the process for taking it into account the promo in the CRM / ERP, the creation of promo codes …
This will also allow you to validate a little upstream that your promotion can be managed by your information system, which is sometimes not the case (ex: apply a discount on old products with a different marketing method, do a price which only applies to new customers and not to existing customers.
Make a mini business plan to make sure the promotion will pay off
This phase is essential in order to validate that the promotion is really worth launching. For example, if you make a 25% reduction on the sale price of a product, your promotion must generate at least 25% more turnover, which is not easy without having some assurance that the promotional device will be effective enough to generate more sales. For this you do a simple calculation: the turnover currently achieved by the product, the cost of the promotion mechanism, and finally the sales simulations with the impact on the result. It is often the occasion to realize that “price reduction” type promotions are generally not very profitable, and that it is better to add product, offer service, communicate on an offer… Make a mini “brief” to explain your promotion, the target, the conditions, deployment and mechanism, sales support, validation and proofreading
This brief will be used both internally (eg: train salespeople), as well as in marketing (produce promotional materials) and distributors. In addition to the brief (the internal document), you will have to provide promotional material which will be distributed externally
Perform a promotion balance sheet to calculate profitability
The goal is to check the impact of your promotion (eg: list the number of promo codes generated and the turnover achieved, minus the cost of the promotion) in order to extend, stop or modify it.
Indeed, it is by learning from your mistakes that you can improve and progress. Similarly, sometimes we are a little surprised by the results compared to what we imagined. Finally, the obligation to report at the end of the promotion means that you have to choose your promotions wisely, because it takes time!