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How to run a cost-effective sales promotion

How to run a cost-effective sales promotion

By Graham Howarth, director, Protravel

The Q4 Bellwether Report, which highlighted that companies are keen to cut spending in traditional media in favour of strategies including price discounting, makes for worrying reading. While discounting can grow sales, it is usually at the expense of brand equity and customer relationships. 2011 was characterised by an over-reliance on price promotions and although brands are making strong noises about trying to stop these and instead focus on value-added promotions, there remains great pressure from the retailers to keep promoting on price.

Despite this, I expect to see a trend towards more value-added promotions in 2012 as brands increasingly recognise that price promotions can ultimately de-value their brand. Travel and leisure promotions, such as those featuring travel, dining out and family activities, will increase further in popularity as consumers continue to look for ways of maintaining their lifestyle despite the fact that household budgets remain stretched. Consumers will look forward to and enjoy occasions and events which they have won and are likely to feel ‘warm’ towards the brand behind the promotion as a result.

With careful planning and the right advice such promotions don’t need to cost the earth and can deliver a high ROI. Here are my top tips on how to run a cost-effective sales promotion.

Identify your business objectives

What is it that you want to achieve? An uplift in sales? Increased market share? Heightened brand awareness? To instigate product trial? This is the essential starting point in order to establish the right mechanic and reward for the promotion.

Identify the right reward

For brands, the right reward will capture the consumer’s imagination, create awareness and reinforce the brand values, as well as providing an important opportunity to collect accurate data. It must be a reward that achieves the set objectives, but that is also aspirational to the target audience in order to capture their imagination, engage them and make them excited.

This does not necessarily mean a big budget reward, rather it can be a relatively low-cost reward that has a high perceived value. Family days out are increasingly popular as it gives the brand the opportunity to offer a larger prize pool than a single holiday prize. Such prizes have strong appeal as a day out for two adults and two children is likely to cost up to £200 and increasingly consumers just do not have that level of disposable income.

Choose a cost-effective mechanic

The key to a winning mechanic is to keep it simple as consumers are turned off by overly complicated requirements.  How much easier is it to text or email in to enter, than to collect coupons, find a stamp and enter via post? Be sure to make use of digital technology in order to keep the cost of fulfilment/redemption down, but remember to test any technological aspects of the promotion. 

An all singing, all dancing website is great but if it takes ages to open then entrants will be lost and a poor brand experience created. It is imperative to test out any website on a standard PC - is it quick, easy to navigate, how long does it take to enter? Above all else it must be fun, informative & engaging.

Consider using fixed fee

This allows brands to budget for the promotion and means that marketing and brand managers with modest budgets can offer more big rewards for the available budget, while also giving them total reassurance by removing the uncertainty of redemption levels and allowing someone else to take the risk.  A single ‘Fixed Fee’ will be agreed with the provider at the beginning of a campaign, covering sourcing and supplying of all prizes and gifts, distribution, trouble-shooting and the complete management of the campaign from start to finish.

Appoint a supplier who can handle the whole process

Appoint a supplier who has the resources, capacity and experience to handle all the administration and will look after the winners carefully and thoroughly. Booking and finalising travel arrangements, for example, can be very time consuming and people may request changes be made to the original booking. 

A promotional prize that is handled incorrectly can leave a lasting bad impression and blacken a brand’s reputation not only in the eyes of the individual prizewinner, but wider among consumers at large if there is negative publicity in the media, not to mention on social media channels. The promotion is not over until the winner has enjoyed the prize and only has positive comments to make about it.

Value-added sales promotions are a way for brands to increase awareness and sales whilst maintaining margins and avoiding price wars and creativity is essential in order to capture the imagination and attention of any target audience and to give the promotion the ‘chat factor’ and therefore longevity.

BOGOFS and other price promotions are instantly forgotten, whereas a promotion offering an aspirational reward, such as vouchers for money-off holidays, luxury breaks and dining out, on which many people have been cutting back their personal spending, can deliver long-term benefits to the brand.  

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