This post is part of our “5 questions” series, helping merchants ask the right questions before making key business decisions. Read the entire series here on the Clover blog, and explore for more better business tips and tactics.
Brainstorming marketing programs and promotions can be really exciting and fun! After all, a successful promotion can really give business a boost. Before diving into a project, though, you need to ensure it makes business sense to pursue. Promotions require careful planning to make sure they don’t eat into profits or harm business in unintended ways. Here are five questions to get your next marketing idea ready for prime time.
1. What business goal do you hope to achieve with this program?
Increasing sales and revenue is not the only marketing goal. Marketing campaigns can be designed to increase traffic to a website, increase the number of leads in an email database, establish a reputation as an authority, build a social media following, strengthen relationships with high-return customers, test new products or price points, and more. Whatever the goal is, make sure you have one and that it fits with your overall strategy for growing the business. Understanding the goal is crucial for planning and evaluating a promotion.
2. How will you measure the results of this campaign?
Increasing your reputation in an industry is a great goal, but it’s not a SMART goal unless you determine how to measure it. (Learn more about SMART goals in the Be It Resolved series.) If the goal isn’t measurable, it will be difficult to determine whether the campaign was successful. Establish some key performance indicators such as revenue targets, number of leads with full contact information, or number of return customers within a specific time period.
3. What’s your break-even point?
How much to do you need to sell to make back your investment in the promotion? The simplest measure is to add up all the promotional costs, then divide that by the profit you make on each sale. Reaching the break-even point should be one of your performance metrics when determining whether the campaign is successful. In addition to knowing the break-even point, consider whether there is any opportunity cost. For example, if there is one season where you make the bulk of your sales—back-to-school, prom season, Christmas, or summer—and you only have the bandwidth to do one promotion, you need to weigh the risks of one campaign over another. Campaigns can be very time consuming, especially if it’s the first time you’re running it. You might not be able to run your tried and true campaigns if you’re spending that energy and resources on a new campaign.
4. How will you spread the word?
Even the best promotion won’t work if no one knows about it. Spend some time thinking about how to get the word out to customers. Use all the free options available to you: post on social media, email your list of past customers, put up signage, and start advertising before the promotion starts to customers coming in the store. Many stores will start advertising a promotion with a small coupon or flyer they hand to customers with their receipt. There are also options that cost money such as ads online or in newspapers. When evaluating different marketing options, consider who your target demographic is and what is the best way to reach those customers. Ideally your promotion attracts customers more likely to buy big-ticket items or to return when the promotion is over. Check out 8 Steps to Better Target Marketing for more on defining and attracting the right customers.
5. What promotion rules will you set?
Sometimes business owners are so focused on trying to make a promotion successful, they forget to limit it. Yes, it is possible for a promotion to be too popular. Promotion rules are put in place to protect the business from bad customer experiences (such as running out of stock), from losing money, or from being overtaxed by the promotion. Promotion rules should also be closely tied to your goals. If the goal, for example, is to get rid of stock on an item, it doesn’t make sense to limit the promotion one to a customer. If the goal is to bring in as many new customers as possible it completely makes sense to only allow one per customer. To avoid unrealistic expectations, you probably should always limit it to “while supplies last.” It’s better to honor or extend a promotion unexpectedly for customers willing to wait for the next shipment than to have to explain why you ran out of stock. Also, be careful to think through all other promotions—will you allow them to use two coupons on the same item? Perhaps you allow bending the rules if a customer signs up for your loyalty program or your email list. Remember, all restrictions need to be clearly communicated to the customer.
These five questions will help you consider whether a promotion is worthwhile and strategically makes sense.
Make your next promotion a success. Check out the marketing and promotion apps in the Clover App Market.[image: Bartender by Bill Smith on flickr]