We know retailers are under immense pressure to meet budgets, especially at Christmas time.
There are more products on the market than ever before and more retailers in the mix. There are more ways to buy than ever before and greater competition. At the same time, consumers are being more selective and seeking lower prices or if they are finding it hard to make ends meet, buying less.
It can be tempting to adopt a ‘discount mindset’, continually reducing prices and running sale after sale. Discounts and bulk buy pricing helps move stock and reach sales targets during slow sales periods. But it’s also really important not to let the ‘discount mindset’ start to erode your business branding.
Discounting can hurt your business.
You are changing your customers’ price perception. Excessive price discounting trains buyers to focus on the low price as the ‘value’. After customers get used to certain discounted price points, it is difficult to get them to pay regular price.
You are limiting your revenue. Ongoing sales will limit your per-transaction revenue opportunities. While discounts may improve volume, they narrow profit margins, meaning you need to sell a higher volume of goods to generate profits.
Here are five ways sales promotions will add value to your business.
Upselling and cross-selling. When you package or bundle products around a theme or solution, you can often generate sales of multiple items rather than a single item, such as our current Dreamtime Stories mug and coaster promotion.
Entice customers. Sales promotions encourage customer traffic and sales by offering a better value proposition. Offering more for the same price increases the customer’s perception of value without altering benefits.
Driving customer decision making. Limited availability offers can create a sense of urgency with your customers that gets them to act. When customers clearly see the benefits of what you are promoting, there are compelling reasons to buy now.
Create word-of-mouth opportunities. In retail, regular customers are almost always in a routine to buy from you. Promotions give your regular customers a new reason to be surprised and delighted by your business which gets them to talk about you to their friends.
New training opportunities for your staff. Your sales staff can fall into a routine and lose enthusiasm. Promotions give you a chance to train, prepare and re-engage them in what’s new in your business.
By Tui Cordemans, founder of Koh Living
