Staying in the black – the value of promotions and discounts
Unless you’ve were hiding under a rock towards the end of November, you won’t have failed to have missed Black Friday promotions. In what has progressed over the past few years to become the biggest retail event of the year, Black Friday now seems to last up to a week!
Although a great time for consumers to pick up a pre-Christmas bargain, there is some debate in the retail world as to whether Black Friday is actually a profitable event for retailers. Here we look at the pros and cons of discounts and promotions and how to ensure any campaign you run doesn’t end up leaving you out of pocket.
Discount with care
It can be easy to get caught up in the fever of promotional discounting; launching into widespread price reductions without actually evaluating what it will do to the bottom line. A sale can be a great tactic to attracting interest from both existing and new customers. However, as we saw last year with Black Friday, some big name retailers deliberately chose to avoid participating in promotions over the weekend, with others actually coming out as saying the event was unprofitable for them. If the margins aren’t there to offer a 50% discount, then you shouldn’t be offering it. Any discounts should be carefully considered, taking into account the purchase price of the items, the cost of selling it and whether it sells well at full price.
Consider alternative promotions
Discounting isn’t the only option when it comes to promotions and in fact, imaginative alternatives can sometimes go a lot further. Something simple like including additional items as free add-ons when specific items or a certain level of spend is reached can work well to attract customers and also helps to increase the overall spend per customer. Other tactics could involve creating a special package or item specific to that promotion. If there is scope, you could also use promotions to create a wider story – perhaps by initiating a charitable link. This will not only reflect well on your business during the sale, but might also give additional scope for PR opportunities long after the sale has ended.
Promotions aren’t just for retailers…
Don’t get caught in the trap of thinking promotional events are just for retailers – those in the service industry can use promotions to their advantage too. Jumping on the bandwagon of sale periods can be effective as people are already in the ‘spending’ mood. The key is to create a deal just attractive enough – without leaving yourself short changed. Rather than discounting on price, which can serve to devalue your offering, consider adding low-cost items to your package for free or offering a free initial consultation as a means of opening the door to potential new clients.