Promotions are always part of every retailer’s sales and marketing mix, and for good reason — they can drive sales and help you move inventory. But running promotions isn’t as simple as slashing prices or putting up a “SALE” sign on your window. To get the most out of them, you need to consider the type of promotions to offer as well as how to execute them. Francesca Nicasio, retail expert at Vend reports.
What kind of promotion would work best for your store? To help you answer that, I’ve compiled the most common types of sales promotions in retail along with some handy tips to help you implement them correctly.
- Percentage discounts
The percentage off deal (e.g. “20% off” or “50% off”) is one of the most popular and effective types of promotions. Storewide percentage discounts typically work best. For example, offering 10% storewide tends to gather more interest and generate more sales than having select items on a 50% off clearance.
2. Dollars off
An alternative to “percent-off” deals, this promotion involves discounting items by a flat dollar amount (e.g., $5 off or $20 off). It’s difficult to tell whether this offer is better than percentage discounts, as studies and tests have shown mixed results. The right answer depends on your price points, customers, and the perceived value of your offer. If you’re on the fence between a percentage or a dollar amount discount in terms of attracting customers, we recommend that you do the math and look at your promotion from a financial standpoint, so you can figure out the best one to run to maximise profits for your business.
3. BOGO
Buy One Get One (BOGO) is another common sale tactic. This promotion can be applied in two ways – there’s buy one get one free or buy one get the 2nd item % off. BOGO is typically used to move inventory, so if you’re sitting on a lot of stock that you want to clear out, this promotion could be a good option. However, BOGO can frustrate customers as the deal discounts the lower of the two prices.
4. Multi-buys
Multi-buy promotions i.e: “2 for the price of 1” is another good option if you want to clear your inventory. But the success of multi-buys largely depends on the types of products you sell – it needs to be something people would want multiple items of. For example, “Buy 2 Get 1 Free Bottle of Wine” would clearly work well.
5. Free shipping
If you’re running an e-commerce site, free shipping might be a good promo for you. Just remember that like most promotions, the effectiveness of free shipping isn’t set in stone. Some businesses find it really effective. The trick is to make it simple for customers to understand, so perhaps free shipping on all orders above $50.
The aim of any promotion should be to drive traffic and sales, move your inventory more effectively and delight your customers. And your point-of-sale system should be able to help you do this – for example Vend recently added a new promotions capability to make it even easier for retailers to offer percentage discounts, dollar discounts and spend and save promotions. If you want to take it a step further you could also think about linking promotions to your customer loyalty programme if you have one. For example, it can work well to give VIP customers or first-time customers an exclusive offer, or a personalised offer based off their birthday or what they last purchased from you, to keep them coming back.
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