Even if I know nothing about your business, I can almost guarantee that you want to have customers coming in more frequently and each customer spend more of their money with you on each occasion.
So how do we prompt this shift in buying behavior? How do we have our customer feel compelled to purchase TODAY, and to spend more with us? Well, you may like to consider making them a “sweeter” deal.
But remember this: “sweet” for the customer does not have to equate to “giving away profits” for you!
Everyone loves a deal. Look at the huge market out there for “coupon” sites like Scoopon, Spreets, Living Social, etc. Every consumer likes to feel savvy; as though their dollar has earned them the most it possibly can.
You might like to consider if any of the below could be applicable to your business
- a discount for buying within a time frame
- free samples with/before purchase
- free upgrades, access to a community/membership program with/before purchase,
- Applying a loss leader in your marketing
- Applying the ‘do you want fries with that’ principle
- An extended warranty
Regardless of the nature of your business there are many types of incentives that will be attractive to your customers – I cannot stress enough how important knowing your customers and what makes them tick is.
The most commonly used offer we all see is the humble sale.
Stocktake sales, boxing day sales, liquidation sales -- they are all the same deal for the business: selling off merchandise at a lower-than-intended price. They are advantageous if you need to shift old stock very quickly. However in all other situations, my advice would be to consider a different type of offer first.
The biggest mistake I see is businesses discounting as a marketing strategy. You need to think about all the numbers and your profitability before offering a discount (even if the customers aren’t).
Consider the advantage of offering a “bonus item” or “value-add” with each full price sale instead of discounting. For example, if you sell blenders, you might offer a free Smoothie Recipe booklet – which is likely to cost you much less than a discount would, but attracts your market just as much.
Know your market and concentrate on perceived value.
There is a great story about a business owner in an affluent retail strip leaving an employee in charge and giving instructions just before they left to drop the price on some jewelry items by 50%. On their return, they came back to find all of the stock they had previously found difficult to shift totally sold out – but was shocked to realize that the employee had in fact increased the price by 50%.
Now I don’t know if this is a story about the value of employees (or the lack of listening skills of some employees) but what it does demonstrate is that as a business owner it is imperative to know your customer before applying an ad-hoc sales strategy.
If you can get this strategy to work for you, you’ll be regarded as a reputable, helpful business that looks after its customers – and you’ll be protecting yourself from losing money on sale items!
What should I make offers on?
That’s easy – items (or combinations of items) that your clients don’t already typically purchase. If you’ve got a new product that you want people to try, packaging it with an already successful item is a great way to build awareness and get some feedback. Or, if you sell an item that people usually only purchase one of, you could do a deal like “buy 2, get the third free!” In most industries this will still be a win, profit wise.
Say you sell shoes. Many of your customers will only be looking to purchase one pair of shoes. Lets guess that you are selling these spiffy stems for $180, and they cost you $80 to buy. If you were to offer the “buy 2, get the third free” deal on these, the transaction value of the sale would be $360, at a cost of $240 to you, so your profit is $120. Compare this to discounting one pair by 40 % - this would mean selling each pair of shoes for $108, which means the same 3 pairs which you could have sold for the $360 package deal would now be going out the door for $324 – and at a slower rate, too.
While we are in the shoe shop and making the most of your sale season with your 2 for 3 deal; you might be tempted to apply the principle to other items. But before you do, consider this important point. The “deal idea” is only an opportunity in situations where the sale wouldn’t have been likely otherwise.
Business socks are a great example of this. Customers often buy 5 of these at once, so there is little point in making it more attractive to do so; you might as well get your full profit margin on items like this.
In a nutshell - The Top 3 tips I give for increasing the value of each sale are:
1. Be super clear on why you are making an offer (Is your goal to move stock, attract new clients, compete with other businesses, introduce a new item or simply to have a reason to contact your database/market? The motivating factor should play a major part in what type of deal you’ll offer.)
2. Know your customer’s needs and desires
3. Know what you want that offer to achieve before you start thinking prices or deals!