Buy one get one free! Sure these promotions might be easy to create, but how do you ensure they work?
Sales promotions are one of the most effective marketing tools out there. Any type of business can benefit from adopting promotional techniques such as coupons, sampling, temporary price reductions, print media, targeted items for targeted people, features, and more. While these techniques can attract people and increase your business’ engagement rate, some of these promotions might not be as profitable or effective as you think.
Thus, measuring the effectiveness of your promotions is essential to understand what is and isn’t working. Sales promotion effectiveness helps companies fully understand how their promotions and customers work and when done correctly. It helps to make sense of every piece of data, analyze and strategize your next steps better, and establish better communication methods.
Here are some ways of evaluating and measuring the effectiveness of your sales promotions:
- Measure and analyze promo campaigns
Once your campaigns are up and running, you need to set them properly to see how they perform. Organize and analyze your data from all the different channels used, sales volume, cost of promos, profits, and ROI in depth. Spreadsheets can come in handy to correctly record your findings.
Some of the formulas you can use to calculate your sales’ effectiveness can be:
- Actual Sales – Baseline Sales = Sales Lift
- Total Volume – Base Volume = Incremental Volume.
- Compare past and current promos
Looking at past promos can help you analyze future ones and even the success factors and mistakes. Past data can serve as a comparison factor and a great way of identifying the best data source. In addition, comparing the results can show you the best trends and which ones need a whole revamp to become more effective.
- KPIs and ROIs
According to Business Review, “The next step is determining the primary metrics for measuring trade promotion effectiveness. Metrics like sales volume, profits, sales lift, halo, pull-forward, cannibalization, ROI need tracking. No single metric can give a clear idea of the performance of a promotion, and businesses must use a combination of KPIs.”
Tracking the right metrics can identify what is effective and analyze customer satisfaction, engagement, and loyalty value of customers.
- Track competitor & consumer behaviors
Tracking and predicting competitor and client behavior can help you plan great promo. Knowing your competitors and how they run their promotions can help you counter-promote something better without having a potential loss. This can help you determine what units you might need in stock. Some brands even have a promotional and markdown calendar done over six months in advance. Aside from competitors, track what your customers are like and what they like. What type of promotion is your data showing proven successful to them?
Evaluating your promotions on your own or for your small business can be overwhelming and laborious. The best thing to do is learn how to track and find the most effective strategies alone or with AI help/an advisor. Data management and tools can help your business succeed in your promotional campaigns and profit.
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