1. Why have a sales promotion?
Sales promotions are great initiatives to drive incremental revenue. They provide a great reason for your customers to choose your brand over your competitors. Successful sales promotions can also provide an increase in market share by providing that point of difference. FMCG brands have executed sales promotions exclusively through only one supermarket or convenience store in an effort to drive revenue through that channel.
Mobile operators or insurance companies can use sales promotions to achieve more profitable consumer behavior such as encouraging direct debit payment or electronic invoicing.
There are many reasons why sales promotion can be very effective. It is important to know why it is that you are opting for a sales promotion so that you can measure the success of that promotion. Read our blog on The most popular Sales Promotion Incentives
There are many ways to execute a promotion. On pack promotions are very popular with FMCG. On pack promotions often require printing unique codes on packs. Lead times and budgets need to be considered when opting for on pack promotions.
Receipt recognition and image recognition technology is a great technology for sales promotions. Customers are required to photo their receipt and upload to a promotional website. Alternatively, customers can also opt to text a copy of the receipt.
Sales promotions can be executed through all the different platforms such as social media, text and SMS.
Key to deciding on the execution and the platform is to understand your customers and determine which executive will provide the best customer experience.
Budget will determine a lot about the type of promotion. Sales promotions can offer the customer a reward with every purchase or entry into a competition or money off coupon.
Entry into a competition is a good way of keeping within budget. Irrespective of how many people qualify to enter the competition, the price of the sales promotion will remain fixed i.e. the cost of the competition.
If however, a brand opts to reward every customer who purchases the product, the cost the reward will be determined by the number of customers who quality for the reward. If the sales promotion is a huge success and lots of consumers are entitled to the reward, a bigger budget may be required than was originally planned.
This process helps identify whether promotional risk management is necessary to limit your company’s financial exposure in the event of over redemption and costs exceeding the available budget. A Fixed Fee covers the cost of over redemption with complete financial security.
The type of reward should reflect the cost of the product and the action that your customer is required to make. The reward should also reflect your customers demographic and should be attractive and accessible enough to encourage and motivate your customer.
Everyone is a winner is where every customer who completes the action or makes the purchase, qualifies for the reward.
Many successful sales promotions offer customer the chance to win. Other sales promotions provide money off coupons.
The reward is a central part of the success of a promotion.
If you are planning a promotion using a competition mechanic and wish to offer your customers a chance to win a grand prize or several prizes, you may need a lottery licence.
You will need lottery licence if:
Your customers must purchase something at some point to be eligible to enter and you select a winner at random; ie: a lottery or sweepstake.
Even when you have acquired a lottery licence, there are specific rules around the value of the prize that apply to that licence. However, there are ways to structure your promotion so as to avoid the need for a lottery licence.