What are the experts, surveys and latest research reports saying about small business and consumer trends? Welcome to our monthly roundup of research small businesses can use to do business better.
What does research say about sales? How can small businesses use price promotions effectively to drive sales? Are there any downsides? Our monthly roundup of research will help you run your business better.
Sales make a difference
Almost half of all consumers—44 percent to be exact—are “increasingly looking for ways to save money.” For some, that means buying lower-quality items or shopping at more bargain stores. But, 31 percent of shoppers save money by purchasing their preferred brand, but only when it was on sale or with a coupon. McKinsey & Co
Have smart sales
Flash sales are not a flash in the pan. More than half of businesses have found that click-to-open rates on emails for these promotions are higher than for regular correspondence. Flash sales that last three hours have transaction-to-click rates that are 59 percent higher than average. Experian Marketing Services
Double discounts could lead to increased sales because shoppers think they’re getting a better deal. That’s because consumers perceive one markdown followed by a second markdown as greater than a single discount, even when the later technically saves them more money. Journal of Consumer Research
Step discounts, such as offering 15 percent off for purchases up to $100, 20 percent off purchases between $100 and $250, and 25 percent for purchases over $250, encourages customers to buy additional products or spend more at a single retailer. Harvard Business Review
Shoppers like free stuff
Consumers greatly prefer to get something for free instead of receiving a discount. Researchers found that 73 percent more items were sold when a product was offered in a bonus pack than when it carried an equivalent discount. Journal of Marketing
Ninety-three percent of shoppers have taken advantage of BOGO (buy one, get one) deals. Two-thirds of shoppers report that BOGOs are their favorite promotions. Their next favorite deal? Getting a discount (whether it be dollars or just cents) off an item. AMG Strategic Advisors
Not all sales are great
How low can you go? It’ll cost you if you go too low. Between 80 and 90 percent of poor pricing decisions are made by setting a price that’s too cheap. McKinsey & Co
What shoppers don’t want: complicated promotions. Less than half have taken advantage of meal deals or buying multiple items to get a discount later on. AMG Strategic Advisors
Frequent promotions won’t necessarily lead to higher sales. Shoppers are perceptive and they’ll remember if you discounted an item at a higher rate in the past, leading them to view the current deal as inferior. PwC[image: Sale by Charleston’s TheDigitel on flickr]