Sales Promotions

What is a Sales Promotion

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Sales promotions can be an effective way to rapidly increase the growth rate or revenue of a business.

Having an understanding of sales promotion techniques is a great way to further boost sales, as their short-term impact can boost sales figures, ensure targets are met and increase morale among your sales team, which will drive higher performance.

No matter how successful a company is, there are always times when we need to inject some life back into sales – the right promotion strategy is key to that.

Promotional sales are also a great way to grow a customer base over the long-term. Often promotions attract loyalty as they are seen as an advantage for customers. To create a successful sales promotion, you need to understand the target audience, finances, revenue streams and team data to ensure your promotion is likely to be beneficial. To achieve this, you must first look at the various sales promotion strategies, which this blog will explore.

What is a sales promotion?

Sales promotions are a type of marketing strategy, used by businesses as short-term impact campaigns. In most situations, a sales promotion is a temporary plan to boost sales – meaning it’s not always the best way to build long-term customer loyalty – though it can help as part of a loyalty strategy.

The main purpose of a sales promotion is to generate demand for specific products, services and any other offers. The rationale behind this is usually centred around meeting a deadline, or raising awareness of a new product. As a result, sales promotions are a major factor in motivating consumer buying behaviour. When done right, they can be a significant contributor to revenue generation.

There are a variety of types of sales promotions, such as…

  • A simple way of creating customer loyalty. The majority of those who use coupons are looking to save money when they make a purchase. According to statistics, 80% of first-time customers feel motivated to make an initial purchase when offered a discount of some form. 68% of consumers say that coupons help to generate loyalty.
  • Flash sales. Extremely short in length, flash sales are an agile form of sales promotion – creating a sense of urgency for customers to buy products. Stats says flash sales lasting no more than three hours have the highest transaction rates – 14%.
  • Loyalty cards. Another customer retention solution, loyalty cards go hand-in-hand with a deeper loyalty strategy. They help build customer loyalty by encouraging repeat purchases, which, through habit, creates a strong connection to the brand and increases the likelihood of retaining their business. Returning customers spend around 67% more than new customers.
  • In this instance, it’s why a customer buys a product – they’re in with a chance to win something. Customers are more likely to continue doing with a business they view as offering them the best value for money.
  • Free shipping. Data shows 70% of customers will abandon their baskets if they believe shipping costs are too high. Even offering free shipping is an additional cost to a business, in return more sales are made due to customer happiness so overall it can be a real benefit.
  • Free trials. One of the most commonly used sales promotions, free trials can cultivate a customer base through limited access of a product at no charge. Based on a study, some companies saw an average of a 66% conversion rate as a result of free trials.

What is the point of a sale promotion?

When successfully implemented, the purpose of a sale promotion includes employing a sales strategy. There are three primary modes of sales strategies:

  • Push strategy. In definition, push strategy attempts to move products away from the business towards customer – mainly via sales. It’ll be placed in location aiming to attract the attention of customers, such as at the point of purchase.
  • Pull strategy. A reversal of push strategy, pull’s effort is to convince customers to draw products away from companies. Discounts are the usual way this is done – such as buy one get one free sales. This is one of the more commonly used strategies businesses adopt, as it’s all about making a brand name more visible to the consumer.
  • Hybrid strategy. The basis of this strategy is a combination of push and pull. The push strategy is used to direct products, whereas the pull strategy encourages consumers to buy said products.

Setting your objectives

Sales promotion objectives typically aim to persuade customers to make a purchase, be that a product or a service. There are some factors to consider when thinking about implementing a sales promotion. We need to think about how much it’ll cost and if the cost/benefit ratio makes it worth it in the long run.

We saw a real life example of this in 2021. Alcoholic beverage firm BrewDog offered customers the chance to win solid gold cans only available in multi-packs – encouraging customers to buy them in place of products sold on an individual basis. The sales promotion was popular at first, boosting the brand’s revenue as customers wanted to win the cans, which the firm claimed were worth £15,000 each.

However, that popularity quickly went into reverse after it came to light that the golden cans weren’t actually made of solid gold, in fact they were gold-plated brass. Customers vented their anger on social media to the point is impacted the profits of the business. In order to remedy the situation, BrewDog CEO James Watt spent £500k of his own money to appease the 50 winners.

There’s also the question of does a sales promotion fits in with a company’s image? For example, a retailer selling luxury goods may find that reputation at risk if they hold too many sales promotions – as it may shift customer perception by making them look cheap.

Another element to consider is whether sales promotions continue to attract customers after they finish. We need to consider whether we are developing short-term loyalty from customers only interested in bargains. If, as soon as the sales promotion is over, their attention is diverted to another business offering them a better deal the value of the promotion needs to be reviewed. Data suggests that customers whose first transaction with a brand involved a discount of some kind are 50% less likely to return for an additional order.

Benefits of sales promotion

Advantages of sales promotions can offer a wealth of prosperity for businesses such as:

  • New leads. As well as boosting initial sales, new customers can be attracted by what a sales promotion offers them in terms of a discounted price.
  • New product awareness. Raising awareness of a new product perfectly coincides with the launch of a sales promotion, as it’ll expose the product to both new and old customers.
  • Selling surplus stock. A multi-buy sales promotion, or a clearance sale, can be used to sell overstock – leaving inventory open for new product launches.
  • Current customers are rewarded. To retain pre-existing customers is essential, the key for long-term success for any business, so rewarding them is a sensible strategy.
  • Last-minute revenue. If a business is just shy of meeting a target, a sales promotion is a great way to boost profits in a quick manner.

Disadvantages of sales promotion

However, sales promotions can also have a negative impact on businesses:

  • Devalued brand. By running sales promotions too often, businesses are at risk of devaluing their brand by appearing to lose any semblance of exclusivity.
  • Potential complications post-sales promotion. If customers are used to sales, they’ll become less engaged when products return to full-price.
  • Sales promotions lose impact. If they’re being used too often, a sales promotion won’t feel special for customers.
  • Reduce customer loyal. Pre-existing customer will feel ignored if sales promotions are only used to target new customers, resulting in the potential of losing their loyalty.
  • Conditions customers. Some customers will wait until there’s a sales promotion to buy products, making a smaller overall impact on your revenue.

Flexible promotion solutions

Motivating sales team to deliver the best sales promotions has never been easier thanks to our range of Love2shop products, which can be spent at some of the high street’s biggest names. Our Love2shop Gift Card has over 90 retailers, It’s the UK’s best-selling gift card, and can be exchanged a single store e-gift card for the likes of Amazon, ASOS, and Primark.

There’s also our Love2shop Contactless Digital Mastercard, which can be spent at over 120 online retailers – TK Maxx, John Lewis, The Range, and B&M being some of the choices available. After purchase, they’re instantly sent to the recipient’s email inbox. It can also be added to our mobile wallets, capable of being used in-store. Call us today on 0330 333 1201 to speak to an expert member of our team.

Get set for the ‘Golden Quarter’ – 18 ways SMEs can drive sales this Christmas

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Springboard for success or harbinger of doom – not a warning from an am-dram Christmas panto, a focus on the importance of the Golden Quarter to small and medium-sized businesses.

October, November and December are critical for businesses of all sizes and sectors. Strong sales can help you hit the ground running in January and drive revenue. A weak performance can make the rest of the year a hard slog.

Jonas Bergström, head of product strategy and marketing at Extenda Retail, puts it like this: “The Golden Quarter is a time where retailers can make a majority of their yearly profits if they prepare.

“Hence, a successful pre-Christmas period can make or break the difference between the company having a successful or unsuccessful year.”

It’s a bit long for a Christmas card, but it’s a good point.

We’ve pulled together some useful advice for SME retailers and B2B businesses to help drive sales at this key time of year and set themselves up for a great 12 months.

A festive feast for all

It’s not just retailers who are looking for golden opportunities in the run up to the festive season. Businesses of all shapes and sizes across multiple sectors can also benefit from the surge in trading activity at this time of the year.

B2B businesses don’t get a free pass at Christmas either. The festive period is a time to remind loyal clients that they matter to you, with gifts and attention helping to reinforce relationships and help keep them on-board into the New Year.

With summer drawing to a close (yes, we know it barely opened), now is the time to start planning your festive marketing strategy. Competition up to the end of the calendar year will be fierce, so it’s vital to stand out from your competitors, particularly if you’re an SME.

Going for gold

For decades Love2shop Business has worked with around 150,000 businesses of all sizes to help them maximise the impact of their customer incentives programmes.

Our Ultimate Guide to Customer Loyalty offers an invaluable blueprint for any business looking to refresh its existing customer loyalty strategy or design one from scratch.

It’s a rich resource for small and medium-sized businesses looking for tips and advice on how to maintain and grow their loyal customer base.

One of the key insights it offers comes from a study by Bain & Company in partnership with Earl Sasser of the Harvard Business School. They found that even a 5% increase in customer retention can lead to an increase in profits of between 25% and 95%.

Imagine increasing sales by that much during the Golden Quarter!

It’s not too late to make the Christmas connection

In the guide, Love2shop also details the importance of building customer loyalty, illustrating the value of customer recruitment and retention.

It found incentives inspire loyalty in up to 93% of consumers, returning customers spend 67% more than new ones and more than 70% will recommend a brand with a good loyalty programme.

According to the guide: “Simply put, customer loyalty is when a business creates within a customer a strong connection. Through engagement with its customer (reward schemes, customer service), product quality and brand values, it can earn favour over its rivals.”

Small and medium-sized businesses may only now be looking at this, while larger rivals may have been operating a loyalty and retention strategy for some time. But even if you start now, you can see benefits through the Golden Quarter and, by continuing through the year, you can increase those benefits over time.

Here are some great ideas to fill your customers with Christmas cheer – and none of them include singing!

  1. Sleigh it on social media: Consumer intelligence experts at Meltwater report that, as of January 2023 over 57m people in the UK were social media users with 86.4% on at least one platform. Get your festive offers out on Facebook, Instagram, LinkedIn, X (formerly Twitter) and Threads. Maybe you can even persuade your team to do a TikTok video for major impact.
  2. Crack open your mulled drink of choice and hold an event: If you have a bricks-and-mortar location, for the price of a few bottles of wine (or soft drinks) and some nibbles you can create a real buzz with a festive-themed event. Offer discounts, special deals and spot prizes to those who attend. Give it a twist with a competition – we love a ‘best Christmas jumper’ contest ourselves!
  3. Send out holiday cheer in an email campaign: According to Statista email marketing revenues are on an upward curve. They are projected to top $10bn (£7.9bn) in 2023. If you already have a good, GDPR-compliant customer database, now is the time to make it work. Create a campaign designed to engage customers – send messages out regularly, weekly for example, and give them early warnings about upcoming festive offers, exclusive competitions and promotions and new product information. Offering loyal customers ‘special’ treatment is a great way to strengthen your relationship with them.
  4. Dish out some early Christmas presents: Everyone loves a free gift. What better way to incentivise your customers and make them feel valued than by offering them e-code rewards? Perhaps that is driven be a promotional sales offer or by making a qualifying purchase. Or perhaps you run an event where any purchase can spin a wheel and randomly have a chance to win instantly. Giving customers the feeling of getting something valuable back can create a strong connection to your brand. Love2shop can demonstrate how e-codes can be delivered to recipients swiftly via email or text.
  5. Encourage customers to share the love: When we find a brand we love – and that seems to love us back – we want to share it. Referral experts Saasquatch claim 14% of customers offered incentives to refer your business will do so. Christmas is the perfect time to reward successful referrals, with Love2shop multi-retailer gift cards one of the most successful incentives for brand referrals.
  6. Say it from the heart: People like to have their heartstrings pulled a little at Christmas – and they like to see the personality behind the brand. Create some stories around your products and people. Use social media to build a narrative around who you are and be authentic. John Lewis does this brilliantly every year with its much-anticipated festive TV ad but don’t try to be them, give your communications your own, unique voice and tone.
  7.  Something special for someone special: Key customers are not only reliable and high value to our business, as our leading loyal clients often they are the starting point for positive reviews and the word-of-mouth recommendations that attract new customers. Christmas is a great time to say thank-you to those key customers, particularly if your business is B2B. A Christmas card with a gift card inside will help them feel appreciated and reinforce their positive view of your business. Love2shop are the experts here, offering personalised Christmas cards and multi-retailer vouchers to help you send a message to those special customers.
  8. Let them into the toy factory: If your business is retail, you know that customers often find deciding what to buy for whom stressful at Christmas. Retailers such as Amazon and Boots have nailed the trick of dividing products into sections such as ‘for me’, ‘for women’, ‘for kids’ etc. Take a look at your own product range and see if you can curate a festive collection to help your customers easily find the perfect gift.
  9. Launch a Christmas countdown: This is a great one for businesses that like to engage through social media. Launch your own Christmas Advent calendar. Create a series of offers, product highlights or opportunities to win that you can post and promote each day in the run-up to Christmas. It’s a great way to get social followers to interact with your brand and even drive purchasing decisions at this golden time.
  10. Make Christmas a holiday for all: Christmas is, of course, a Christian festival but your customer base almost certainly includes people of all faiths and none – and at Christmas most people like to take part in festive fun regardless of religion. Create your Christmas messaging thoughtfully, focusing on the season of goodwill and messages of giving and joy to make everyone feels comfortable and happy to join in with your Christmas activity.
  11. Season’s greetings: People love to feel loved – and a simple thank you can go a long way. Why not send out a heartwarming message, via email and social media, thank your customers for their support throughout the year. It doesn’t even have to be in response to a purchase, so long as you have permission to contact them, a nice festive thank you message will make them feel valued. If you like you could even add a little reward too.
  12. Think about those doing Christmas on a budget: The rising cost of living has affected people across society and many of your customers may still be feeling the effects. They may have even fallen away a little, with their expendable income shrinking. Offering them discounts or cheaper ‘stocking filler’ offers tells them you remember them and may ensure they make some sort of purchase from you in the lead-up to Christmas.
  13. Give charity or community projects some cheer: Ethical positions are having an increasing influence on both consumer and client habits. More and more, they are choosing to buy from retailers or work with businesses that have an authentic position on important environmental and moral matters. Smaller businesses can find space here too. By teaming up with a local charity or good cause such as food banks, local wildlife or environmental groups for example, you can make a real contribution to issues in your area and give your customers a reason to feel positive by supporting you.
  14. Get your customers into the festive spirit: Got a physical store or office? Great, crack open the tinsel and baubles and cry ‘Yuletide for all!’ Are you digital-only? No problem, you can use fun graphics, pictures and animations such as falling snowflakes when people click on your website. Whatever you choose to do, make it inclusive and fun and remember to keep the focus on what your customers need. Fun and purpose working hand-in-hand is a strong combination if you want to encourage customer loyalty.
  15. Oh Christmas tree, oh Christmas tree, we love sustainability: As we mentioned earlier, environmental matters are something that more customers are paying attention to. Do you offer products that are sustainable sourced? If so, make sure you tell people! For example, Love2shop works with some partners to supply biodegradable gift cards made from sustainable card, allowing them to reward customers responsibly. Businesses that demonstrate authentic environmental credentials are getting noticed for it as people place importance on doing the right thing. And we should all be doing our bit to save our world anyway, don’t you think?
  16. Spread the cheer with influencers: Social media sites such as Instagram and TikTok are increasingly populated by so-called ‘influencers’. These are people with large followings who may be prepared to promote your products. While they can be a powerful marketing tool, the costs can be astronomical. For small or medium-sized businesses, focus on identifying existing customers with followers say, up to 10,000, or contacting social influencers with this kind of audience that fit with your target customers. Businesses are often surprised that these ‘microinfluencers’ are aware of their brands and keen to work with them. Don’t be afraid of starting a conversation via their DMs (direct messages).
  17.  ‘Tis the season to make things sparkle: People associate Christmas with fun and colour, take advantage by changing the way you package up your products. Can you work your branding into a Christmas theme? Or include some little surprises within the package that make it memorable, like free festive-themed gifts. Don’t underestimate the power of visual appeal. Whether in-person or from a distance, with a little thought you can create a festive customer experience to remember.
  18. Timing is everything: Whatever you decide to put in your festive marketing strategy, choose when to activate it carefully. Starting your Christmas marketing push in August may just annoy people and have the opposite effect going into the Golden Quarter. Let autumn settle in and, once Halloween has been spirited away, give the snowglobe a shake.

Remember, incentives and engagement are at the heart of all successful festive marketing ideas. Many people are in the mood to buy and are primed to receive gifts, making it a rich time for brands willing to reach out and engage with them.

Similarly, for B2B businesses, the approach to Christmas is a time when giving thanks and appreciating those clients who have supported us over the last 12 months is front and centre. How you do it is up to you. No-one knows your customers or clients better. But at Love2shop our team of experts has worked across every sector of business to provide the platform and products on which successful customer campaigns are built.

When it comes to customer recruitment and retention programmes, we’re happy to share our decades of experience to make your Golden Quarter truly shine.

Get in touch with our team today or visit business.love2shop.co.uk to find out how we can help.