Promotions are often breadwinners that can be a lot of fun to plan and run. (Especially when the customers start rolling in.) But they are also very time-consuming, and it can be easy to lose sight of whether they are still adding value or just draining profits and energy. How do you make sure your promotions are worth the effort? Here are 5 questions to help you determine: Is your promotion worth repeating?
1. How much did it cost you?
Making a profit is not the only reason to run a promotion. They can be designed to meet all sorts of business goals such as adding new customers to your email list, advertising your latest specials or rewarding your loyal customers. But even if boosting profits was not the goal, when you’re trying to figure out whether to repeat a promotion you need to know how much it cost you. If you, at a bare minimum, broke even and the business results were worthwhile, it’s likely a winner. If you didn’t break even (or even come close), you may want to try something new.
To calculate costs, add up all the promotional costs including time to plan the promotion, train the staff, and to get the word out. This can be trickier than it first appears, especially if you weren’t tracking your time accurately. You should also calculate the breakeven point—the number of units you have to sell of that promotional item to make back your costs. To calculate, divide all those costs by the profit you make on each sale.
Armed with the total costs and an estimate of what you needed to sell to make it back, look at your actual results using Clover’s app, Insights. You can see how many units you sold in the promotional period.
You should also consider whether the promotion led to more sales. For example, you may not have sold enough units to break even, but if the promotion brought back your best customers and they spent more than you expected you may have still ended up ahead. A quick look at your average ticket size will give you a sense of whether folks stuck strictly to the promotion or also got tempted into buying a little something extra.
Wondering whether you enticed customers into the store who didn’t take advantage of your campaign? You can also compare the total sales to a similar time period when you weren’t running any promotions. This will reveal any “additional” sales you got by increasing foot traffic.
2. Did your promotion help you meet a business goal?
Now that you know what your costs and profits were, look at whether you had any additional upside. Did the promotion help your business get ahead in other ways? For example, were you able to grow your social media following? If so, you increased your ability to stay in front of your customers and advertise future promotions. Did the promotion offer the opportunity to reveal a new product and get first-hand feedback from your customers? This can be priceless and save you from investing too much in a product that your customers just aren’t interested in.
Did it fail to meet the goal you intended, but brought unexpected benefits that make it worth repeating? (Sometimes the unexpected results are the best ones!)
On the other hand, you may also find that a promotion solved a business problem and there simply isn’t a reason to run it again.
3. What would you lose if you didn’t repeat the promotion?
Are you going to be the only storefront not running a Christmas special? Is this promotion the only reason customers trek out to your ski shop in the middle of summer? Think through all the risks of not running it again.
Another way to look at this same question is, will customers be disappointed if you don’t run it? If you think there is likely to be disappointment, do you have a plan to handle that?
4. Were you able to keep up with demand?
Was your team overwhelmed by the response or confused by the promotional rules? This may seem minor at first until you look at it from the customer’s perspective. If I waited in a long line to speak with a harried cashier only to discover the promotion sold out early I might not be inclined to return. Here are a few questions to help you quantify your efforts:
- Did you run out of stock?
- Did transactions take much longer as staff struggled with coupon codes?
- Were the lines longer than necessary?
- Did you have enough staff to handle the rush?
- Did you get good feedback from customers, or did you mostly get complaints?
Another key issue to think about is whether it will be easier to run the second time around, or will it require just as much work?
5. Are the customers who took advantage of the promotions “high-value” customers?
As a business owner you’re probably keenly aware that not all customers are the same. Some come in only for sales, while others become regulars or will buy even when you aren’t reducing the prices. In fact, some become true fans and help you promote your store. Take a look at the people who attended your last promotion? Does Clover Insights indicate they are your most valuable?
Promotions are a great way to bring in more customers, and with the tips above you’ll be able to optimize them and grow business quickly. Want more help running promotions? Check out Clover Promos and other apps on the Clover App Marketplace.
Clover is sold by leading U.S. banks including Bank of America, BBVA, Citi, PNC, Sun Trust and Wells Fargo. You’ll also find Clover at our trusted partners including Ignite Payments, Restaurant Depot, and Sam’s Club. For more information, visit us at clover.com.