Why do some promotions have no impact on sales?

calendar_today February 14, 2021
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Marketing Team

Prisma Retail

  • Has your company ever run a promotional campaign, only to find that, after months of planning, the display materials have been placed incorrectly, in the wrong spot, with the wrong product or there is overlap between promotions?
  • According to Harvard Business Review, 60% of promotional displays are flawed and more than half of promotions have no impact on sales. For your company, being able to identify potential campaign errors can be the difference between a promotion being a complete success or a waste of money.
  • In the following Blog article we will look at the main challenges retailers face when creating their promotional strategy.
  • What are the challenges that retailers face around promotions?

  • 1. Combination of multiple (and complex) promotions in a single campaign. What happens when a customer wants to take advantage of more than one available discount, or combine promotions? Many systems are unable to accurately calculate complex promotions in real time and do not support the combination of several promotions in a single transaction. The result is an unhappy customer, a frustrated employee and a possible lost sale.
  • 2. Promotion implementation across multiple sales channels. Retailers rely on different operational systems to manage the promotional strategy in their sales channels. For example, they have one system for their e-commerce channel and another for their physical shops. Having decentralized systems is time-consuming and inefficient because, if the retailer wants to offer the same promotion in multiple channels, staff has to re-enter the data into each POS system. This alternative leaves retailers with fewer options to strategically tailor offers and hinders the analysis and centralization of data.
  • 3. Increasing margins and measuring ROI Offering a leading product at a price lower than stipulated may be an efficient strategy for some retailers but the overall objective of promotions is to stimulate sales while increasing margins and positioning the company. In many retailers' operating systems, the analysis of promotional data is difficult. That is, there is little information about which promotions are the most effective, which customers generate the most revenue, and whether loyalty and rewards programs are profitable for the company.
  • 4. Management of loyalty and rewards programs The loyalty and rewards programs are methods acquired to increase and maintain customer loyalty. Many companies lack comprehensive reporting tools to accurately measure the performance of their loyalty programs. Launching a loyalty and rewards program requires an investment of time, creativity and money, so it must meet the expectations of both the consumer and the retailer. Retailers need data to understand whether loyalty and rewards programs actually increase customer purchase frequency and sales.
  • A solution to optimize promotional campaigns

  • Promotions are a critical aspect for retailers, so they must be managed in an efficient and flexible manner to ensure a continuous return on investment.
  • Without promotion management software, companies can face poor execution of promotion plans. This can lead to lost sales, additional costs, reduced store profits and a negative impact on balance sheets.
  • With Prisma Promotions you can measure the success of your campaigns while eliminating the possibility of operational errors. Besides, Prisma suggests different promotional dynamics to generate more traffic and increase the average ticket amount. Thus, you will be able to measure results comparing pre and post-promotional sales and marketing investment to calculate the incremental profitability of each promotion.
  • Let's review some of the promotional mechanics that can be measured:

  • Direct Discount: This is a type of mechanics in which we can define a monetary value or percentage that will be applied to the final price paid by the customer. It is used for example to indicate promotions such as "30% discount on..." or "$150 discount taking...”
  • Get A pay B: This is discount mechanics, where A are the units to be purchased by the customer and B are the units to be paid by the customer. It is used for example to indicate promotions such as 2x1, 3x2, 4x3...
  • Discount x Quantity: This is discount mechanics that apply if we purchase more than one unit of the same product. It is used for example to indicate promotions such as “80% discount on the 2nd unit".
  • And in turn, with Prisma Promotions we can define some conditions and restrictions for the promotional action.

  • Restriction per Units:
    ◦ Maximum Quantity: Indicates the maximum units that the customer can purchase with the discount. Above this value, the units will not be eligible for the promotion.
    ◦ Minimum Quantity: Indicates the minimum units that the customer must buy for the discount to apply. Example: If the action is "15% discount if you buy 3 units", here we must enter the number "3".
  • Restriction per Amount: When activated, the Minimum Quantity and Maximum Quantity fields are enabled.
  • Minimum Monetary Value: Indicates the minimum monetary value that the customer must purchase for the promotion to apply. Example: If the action is "10% discount on purchases over $1,000", here we must enter the number "1,000". If this amount is not reached, the discount does not apply.
  • Maximum Monetary Value: Indicates the maximum monetary value that the customer can purchase for the promotion to apply. Above this amount, the discount will not be applied to the purchase surplus. Example: If the action is "10% discount on purchases up to $1,000", here we must enter the number "1,000". If the purchase is $1,500, the $500 will not have the 10% discount.
  • Conclusion
  • Promotions can be powerful tools for both retailers and producers to increase sales and inspire higher levels of customer loyalty. The key is to be able to establish attractive and effective promotional mechanics, and to have the data necessary to leave behind the old practices of "ideal price guessing". With the right tools and approach, retailers can deliver a unified shopping experience, nurture the brand-customer relationship in an omnichannel environment and take advantage of every sales opportunity.
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