How Special Offers & Discounts Can Work for Your Business
When have you been enticed by offers or discounts?
We're all bombarded with special pricing offers every day of our lives. These offers range from simple discounts, buy-one-get-one-free (BOGOFF) promotions, to membership and loyalty schemes.
Some companies even offer their products for free as a trial to enjoy a taste of their services.
If you're not making use of discounts in your promotional activities, you may be excluding many potential customers from your business. Production promotional activities are proven to work. Before we look at some examples let's explore some strategic questions.
Examples of Offers you Could Promote
Below is a selection of the terminology used in these schemes. If you're unsure whether this will work for you, test an idea on a small number of target buyers.
Free Seminars, Reports or Telephone Training
Many investment companies use the technique of offering free seminars at exclusive locations. The weight loss industry also offers your first meeting for free. These are successful because participants receive knowledge about the programmes and get to try first hand.
The organisation receives details of "hot" prospects they can market to at later dates.
Businesses also provide free reports or telephone conferences via their websites. An email address is required to register for the promotion then remarketing of associated products begins in earnest.
An Associated Product for Free
This example is where the consumer receives an associated product or a free gift if they purchase the core item. This offer could be a free car wash with £50 of fuel, 5p off a litre of fuel with a £50 spend or a free case with each laptop.
These enticing offers provide real value for the consumer and entice them into your store.
Buy One Get One Free
With "free" being one of the strongest selling words, it's no wonder most promotions incorporate this term. Most supermarket promotions are not general percentage discounts but offer a free product if you buy one or two items.
This scheme is popular with the high street coffee shops. Each time you buy your coffee you receive a stamp on your collector's card. After eight stamps, you receive a free drink. This promotion works well because it increases loyalty over a long period.
Simple Percentage Discounts and Sales
For big ticket items, the above promotions won't work. Kitchen showrooms and furniture retailers only usually offer large discounts during a sale period. There are various legal restrictions in the UK for sales promotions especially for discounted products.
When comparing against the original price of the product, the retailer must show that it advertised at that price for at least 28 consecutive days at a certain number of stores. Using the verbiage such as "up to 35% off" must apply to at least 10% of your stock.
Free Samples of Products
If you have a bricks and mortar business, then you need people inside your store. Food outlets offer sample tasting sessions out of normal working hours. Delicatessens offer samples of their products to try before purchasing. If you hold such an event, it's wise to offer discount vouchers for those that attend to use at a later date.
The software industry is fully aware that by offering a free trial many customers will upgrade to purchase the paid version. It's often difficult to explain all features and benefits in words or video so trials get the product in the hands of the customer.
Other retailers give away sample products in magazines or to commuters at railway stations. One popular promotion is a free breakfast cereal bar for those arriving for work.
Offering product promotions such as the examples above can boost long term success so why not try some of these on your business?
Think About the Life Time Value of a Customer
Offers are made to entice people to try out a new product or buy more volume. They're targeted to both potential and current buyers. An offer should never be costed or structured purely on the basis of the product being discounted.
Certain goals are made to bring new customers into a business for many years. The discounted offer may have people buying from you for years ahead so have in mind the lifetime value of any new customer you bring on board.
Costing Offers for Maximum ROI
Sometimes it might be best just to give something away as we're encouraged by the word "free". It's one of the strongest copywriting words there is.
Supermarkets only promote their offers because they know once you're in their store you'll purchase other items from them. Their return on investment just for their promotions could be at break-even, but the additional profits made overall make it worthwhile.
Consider another example of offering a free dessert with every main meal.
- Although your unit cost of a dessert could be as low as £2, the value to your diners is the menu price of £6 or more.
- If your marginal profit on each meal is £10 then this offer brings in £8 profit.
- You'll be able to up-sell beverages and appetisers probably doubling those profits.
- This offer will bring in new people to try your services that could turn into repeat long-term customers.
The overall profits are much higher and present excellent ROI if executed correctly.