Promotion. A sticky point for all business owners. They offer a quick way to drive traffic to a business, but the trade off is questionable. Was it profitable? Are the new customers that you acquired going to be repeat customers? And the most important question of all, did this promotion damage your brand image?
Promotions that are poorly planned are effectively a band aid for businesses, bringing in short term business but negatively impacting long term growth and eroding brand image. In difficult economic times, it becomes easy to turn a blind eye to the long term impact and focus on the immediate results to help keep a business afloat.
Does this sound like you? If so, don’t fret. There are ways to continue benefiting from sales and promotions without causing irreversible damage to the brand you’ve worked so hard to build.
First, let’s focus on the benefits and disadvantages of sales and promotions.
- Increase sales: Duh. I don’t think this one needs explanation.
- Drive traffic: Sales are a surefire way to bring people through the door and can even help in acquiring new customers.
- Use staff capacity: Service driven businesses like salons, massage centers, etc. often run promotions during slow periods to fill up their staff schedules and ensure they’re covering salaries and other overhead costs.
- Highlight new products or services: This is a controversial point, as many traditional marketers will never recommend promoting a new offering, but promotions can help drive trial for newer products or services that your base clients may be hesitant to try.
- Push slower moving services and products: Clearing inventory is a common objective for sales in product based businesses, and promotions can also help increase bookings on slower moving services that may need a push.
- Conditioning clients: Regular sales and promotions condition your customers to expect discounts. They may even choose to avoid visiting you if you are not running a sale.
- Clients will lose confidence: A former client of mine began regularly running promotions against my recommendation. After a few months, one customer actually asked an employee of that business, “are you guys closing down?” Don’t cause your customers to question the business’ stability.
- Clients will buy in bulk: Loyal customers who regularly use your services or buy your products will take deep discounts as an opportunity to bulk up, thus impacting your future revenue.
- Dilute brand: And the most detrimental of all is that constant discounting dilutes your brand image as customers become more and more price sensitive. If all competitors are doing the same, brands will matter less and the bargain will matter more.
So, how can you capitalize on all the pros and avoid the cons of promoting? Here are a few tips:
- Have a promo schedule: This is the most important tip of all, and it links to much of the advice that will follow it. Try to set out all your planned promotions at least 6 months in advance to allow yourself time to create the material to communicate it, get your staff ready, ensure stock availability, and create buzz with your clientele. When you are scrambling from month to month to decide on promotions, you will become sloppy and inconsistent (see point 7), and the lack of intention behind each sale or promotion will send one clear message: desperation.
- Set your objectives: Not all types of promotions generate the same results. Discounting can drive trial and bring in new customers, value adding can encourage sampling of new products and services by existing customers, and bundle packing can help clear inventory. Whatever your objective is, make sure that the promotion is the right one to lead to that end result.
- Link to seasons or events: Seasonal promoting is commonplace across all industries, so if you’d like to have a regular stream of sales then it’s best to align them with the community’s seasonal calendar to ensure the sales remain purposeful. Eid, Christmas, Mother’s Day, or Dubai Summer Surprises are perfect examples of planned sales that can remain as annual fixtures on your calendar without raising any eyebrows among your clients.
- Don’t promote every month: And if you have to, make each month’s promotion dramatically different from the last. Another client of mine insisted on having regular promotions running each month. This caused customers to call ahead and ask what was on offer each month before deciding whether to come in or not. When one customer was told there were no promotions on for that month, she laughed and said, “I’ll call back in two weeks and check again because I know you always discount in the last week of the month to boost sales.” Sadly, she wasn’t wrong. The brand had become predictable, and customers knew they only had to wait a few weeks for their favorite services to go on sale.
- Build stories: If you want to promote outside of the seasonal calendar mentioned in point 3, it is best to build a story around your sales. Some brands even create their own annual sales like the Marina Home Annual Sale that become events in their own right that customers anticipate. The scarcity of regular discounting throughout the year makes big blowout sales like this effective. Other stories could be your business’ anniversary, your 1000th customer, the launch of a new services, and so many other things.
- Avoid being repetitive and sloppy: When you don’t create a plan as recommended in point 1, you will find yourself developing half baked, last minute ideas for promotions that make little impact. You will also look into your recent history and try to replicate successful promotions again and again. This predictability will encourage price sensitivity among your clientele and cause them to wait for the last minute sales they know you are going to resort to.
- VIP early access: While everyone loves a good sale, regular discounting can cause your regular clients to lose confidence in your business. Avoid this by offering your loyal base “VIP early access” to some of your sales. This rewards these constant customers, gives an impression of a limited time benefit, and reminds them that they are still important to you.
- Limit purchases: If you are selling a product that will continue to be available after the sale, you may want to consider limiting the amount that any individual can purchase to avoid bulk buying as detailed in the disadvantages above. If you are selling services, limit the amount of time that the purchaser can avail the service. For example, claiming that any beauty treatment purchased during a sale period must be used within the next 6 weeks offsets the possibility that a loyal customer will buy all of her beauty treatments in one go during the promotion.
It’s imperative to remember that promoting is only one of many marketing tools you have at your disposal. It can be effective, but there are also a number of other ways to reach the same objective you desire without impacting price and profits. Promoting is not a solution for everything and it can cause a myriad of other problems if not done carefully.