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Promotions are almost always part of a retailer\u2019s sales and marketing mix, and for good reason \u2014 they can drive sales and help you move inventory.<\/span><\/p>\n But running promos isn\u2019t as simple as slashing prices or putting up a \u201cSALE\u201d sign on your window. To get the most out of them, you need to consider the type of promotions to offer as well as how to execute them. <\/span><\/p>\n And that\u2019s precisely what we\u2019ll talk about in this post. We\u2019re shedding light on the ins and outs of promos and listing the most common types of sales promotions in retail along with some handy tips to help you implement them correctly.<\/span><\/p>\n Let\u2019s dive in.<\/span><\/p>\n A sales promotion is a marketing tactic used by retailers to drive sales. It involves offering shoppers a deal that would enable them to either purchase a product for a lower price (e.g., $10 off) OR get more value of the sale (e.g., Buy One Get One Free).<\/p>\n There are many types of retail promotions, which we will discuss in more detail below.<\/p>\n What kind of promotion would work best for your store? To help you answer that, here\u2019s a rundown of the different types of promos in retail, and how they typically perform.<\/span><\/p>\n The percentage off deal (e.g. \u201c20% off\u201d or \u201c50% off\u201d) is one of the most popular \u2014 and effective \u2014 types of promotions.<\/span><\/p>\n \u201cHands-down, the most popular style offer is n% off anything,\u201d says Mike Catania, Chief Technology Officer of <\/span>PromotionCode.org<\/span>. \u201cWe\u2019ve tracked coupon and offer usage over tens of millions of promotions for the past nine years, so we have a solid understanding of what types of deals convert the best.\u201d<\/span><\/p>\n As for <\/b>how<\/i><\/b> to implement this offer, Mike says that storewide percentage discounts typically work best. \u201c5% storewide, with few exceptions, will garner more attention and generate more sales than even a 60% off clearance, the next-best option.\u201d<\/b><\/p>\n Krista Fabregas, a retail analyst at <\/span>FitSmallBusiness.com<\/span>, is also a fan of percentage discounts and says that they produce one of the highest conversions for discount promotions.<\/span><\/p>\n \u201cPercent-off sales are fairly simple to profit-test, too. If net profit numbers don\u2019t hold for a 20% discount, we move it to 15% off and still sell more than if we offered a flat amount, like \u201c$5 off.\u201d Oddly, even if \u201c$5 off\u201d has the greater savings after doing the math, the percent-promotion tends to convert better.\u201d<\/b><\/p>\n An alternative to \u201cpercent-off\u201d deals, this promotion involves discounting items by a flat dollar amount (e.g., $5 off or $20 off). <\/span><\/p>\n It\u2019s difficult to tell whether this offer is better than percentage discounts, as studies and tests have shown mixed results.<\/span><\/p>\n Krista at FitSmallBusiness found that percentage discounts typically outperform dollar amount deals. However, Craig Simpson at <\/span>Entrepreneur<\/span> cites a study which found that a $50 off coupon beat a 15% off promo.<\/span><\/p>\n This tells us that the \u201cright\u201d answer depends on your price points, customers, and the perceived value of your offer.<\/span><\/p>\n As Craig writes<\/span>, what matters to your customers is \u201ctheir initial impression of what sounds like a good deal.\u201d He proceeds to give the following examples (emphasis added):<\/span><\/p>\n Let\u2019s say your product is something fairly inexpensive, like a supplement that regularly sells for $25 for a bottle that contains a one-month supply. <\/span><\/i>I would predict that an offer for 40% off would do much better than an offer of $10 off, even though the actual value of the two offers is equivalent. <\/i><\/b><\/p>\n For a more expensive product, perhaps a piece of exercise equipment that normally sells for $350, I would predict that an offer of $50 off would do better than an offer of 15% off \u2013 even though the 15% offer is actually slightly better. <\/span><\/i>The $50 offer sounds like a substantial amount of money. And for most people, figuring what 15% of $350 is may seem like too much work.<\/i><\/b><\/p>\n If you\u2019re on the fence between a percentage or a dollar amount discount, we recommend that you do the math AND look at your promotion from a psychological standpoint so you can figure out the best type to implement.<\/span><\/p>\n Buy One Get One (BOGO) is another common one. This promotion can be applied in two ways: There\u2019s <\/span>buy one get one free<\/span><\/i> or <\/span>buy one get the 2nd item % off<\/span><\/i>.<\/span><\/p>\n BOGO is typically used to move inventory, so if you\u2019re sitting on a lot of stock that you want to clear out, this promotion could be a good option. <\/b><\/p>\n As for consumer response? Krista says that \u201cBOGOs can be iffy for conversions, especially online.\u201d<\/span><\/p>\n \u201cBOGO-half-off deals can frustrate customers since the deal always discounts the lower of the two prices. So, in BOGO-half-off, we tend to see lower revenues due to customers searching out the cheaper items for the BOGO pairings. BOGO-free converts better than the BOGO-half-off.\u201d<\/b><\/p>\n Multi-buy promotions (i.e., \u201c2 for the price of 1\u201d) is another good option if you want to clear your inventory. But the success of multi-buys largely depends on the types of products you sell.<\/span><\/p>\n As Krista puts it, <\/span>\u201cwhen considering a multiples-type promotion, first consider whether the product is normally used as a set or is a near-commodity, like socks or wine. There, multiples discounts can work. Otherwise, they don\u2019t.<\/b><\/p>\n For example, \u201cBuy 2 Get 1 Free Bottle of Wine\u201d is a winner. \u201cBuy 2 Get One Free Ottoman?\u201d Not going to move much.\u201d<\/b><\/p>\n A great example of multi-buys in action comes from Beloved Shirts. In the email below, you\u2019ll see that they\u2019re running two types of offers: \u201cBuy 2 and get 1 50% off\u201d and \u201cBuy 3 to get the 1 item free.\u201d<\/p>\n Multi-save promotions include offerings like:<\/p>\n Conditional promotions, on the other hand, include:<\/p>\n These types of promotions encourage sales\u00a0without necessarily killing your revenues or basket values. They also encourage shoppers to check out more products, versus just looking at what\u2019s on clearance.\u00a0<\/strong><\/p>\n If you\u2019re running an ecommerce site (and you totally should), free shipping might be a good promo for you.<\/span><\/p>\n Just remember that like most promotions, the effectiveness of free shipping isn\u2019t set in stone. Some businesses find it really effective. \u201cFree shipping always drives the most conversions, and that\u2019s the coupon usage we\u2019ve seen the most,\u201d says Krista<\/span><\/p>\n Others, not so much. Mike at PromotionCode.org considers free shipping as \u201ca bit of wildcard.\u201d<\/span><\/p>\n \u201cFree shipping offers have the lowest rate of success (as reported by our community) but the highest number of use attempts,\u201d he says. \u201cThere are several reasons for this but a substantial one is when the offer is shared, the person sharing the offer had a qualified order and subsequent users did not. Merchants could avoid this confusion by either making blanket policies or by explicitly attaching the conditions of the offer itself.\u201d<\/span><\/p>\n For example, instead of offering free shipping on select orders, Mike says it\u2019s better to offer free shipping on, say, all $100 purchases because the latter is easier to understand.<\/b><\/p>\n This promotion is becoming increasingly popular among ecommerce merchants. Online sellers know that the #1 barrier to conversions is the fact that people can\u2019t touch and feel the products before purchasing. To address this, more and more ecommerce retailers are implementing \u201ctry before you buy\u201d initiatives.\u00a0<\/span><\/p>\n Try before you buy is exactly what it sounds like. It lets customers ship a product to their home (typically they only pay for shipping costs) so they try on or see the product in action. Shoppers are given a specific trial period (ranging from a couple of weeks to a month) and if they don\u2019t return the item back to the seller, they will be charged for the full amount.\u00a0<\/strong><\/p>\n If you\u2019re an online retailer, try before you buy could be a worthwhile effort. Yes, the offer does come with risks. There\u2019s a chance that too many people return the product and you\u2019re stuck with used merchandise that you can\u2019t sell. That\u2019s why this offer is best used on products that have an extremely high satisfaction rating. If customers are truly happy with your merchandise, they will be more likely to keep it.<\/p>\n The cosmetics brand IL MAKIAGE is an excellent example of a company implementing try before you buy. To increase the likelihood of customers loving the product, IL MAKIAGE invites shoppers to take a quiz to find the right type of foundation for their skin.<\/p>\n Once they have the perfect match, shoppers can select the \u201ctry before you buy\u201d option, and they\u2019re given 14 days to try the product for themselves. If they don\u2019t love their purchase, they can send it back before the 14 days are up. If they\u2019re happy with it, they can keep the foundation and IL MAKIAGE will charge them for the full amount.<\/p>\n This promotion is exactly what it sounds like: customers get a freebie for qualifying purcahses. Ideal for retailers with surplus stock or simply want to boost conversions, this offer can be extremely effective in getting people to buy.<\/span><\/p>\n Here\u2019s an example from Ulta, which gave away a free travel spray and crossbody bag for any $40 purchase.<\/p>\n We talked about the different kinds of sales promotions you could offer. Now let\u2019s discuss the steps you can take to select the right one for your business.<\/span><\/p>\n The first question you should ask when considering promotions isn\u2019t \u201cWhat type of promo should I offer?\u201d Rather, it should be, \u201cWhat do I want to achieve?\u201d<\/span><\/p>\n Start by identifying your objectives. Do you want to increase foot traffic? Boost your bottom line? Are you trying to make room for new inventory? The answer will help you decide on the right promotion.<\/span><\/p>\n If you want to draw people into your store, for example, then an attractive discount might be the way to go. On the other hand, if your goal is to move inventory, then you should look into BOGO or multi-buy promotions.<\/b><\/p>\n In some cases, you want to promote a specific behavior from your customers. For example, when retailers like Nordstrom and Target wanted to encourage customers to choose in-store pickup, they offered discounts to shoppers who opted for those order fulfillment options.\u00a0<\/strong><\/p>\n Another way to figure out which promo is the best? Test different types to see what works best for your store. That\u2019s what Gary Nealon, President of <\/span>RTA Cabinet Store<\/span>, did when trying to decide on what promotion to offer. <\/span><\/p>\n \u201cWe surveyed our audience when we were thinking about shifting to a free shipping model, and we found that a \u201clowest price guarantee\u201d was more important than the free shipping for our niche because people expected there to be a cost associated with shipping big products.\u201d<\/b><\/p>\n Generally, blanket promotions that are easy to understand (e.g., \u201c50% entire store) are a lot more enticing. However, if you\u2019re trying to protect your profits or want to avoid people taking advantage of your offers, it may behoove you to set restrictions such as:<\/span><\/p>\n If it makes sense for your promotion, see if you can apply any of these restrictions. Just note that the more hoops people have to jump through, the less likely that they will make a purchase.<\/span><\/p>\n Promotions need to be\u2026 well, <\/span>promoted<\/span><\/i>. Here are some pointers for enticing people to buy:<\/span><\/p>\n Avoid setting promotions with no end date, as this will cause people to dilly-dally. It\u2019s best to implement limited-time offers to encourage customers to get a move on. <\/span><\/p>\n This is one of the reasons why flash sales are so effective. Shoppers know that the promo won\u2019t last long, so they act quickly. <\/span>Studies have shown<\/span> that 50% of flash sale purchases happen in the first hour. <\/span><\/p>\n For best results, add countdowns telling people how much (or little) time they have left to take advantage of your offer. Check out what Habitat did in its store below. In addition to the standard \u201cSale\u201d signs, they also had \u201cLast 2 days\u201d signage to further drive a sense of urgency<\/b><\/span>. <\/span><\/p>\n If you collect data on your customers browsing and purchasing behaviors, put that info to good use when running promotions. Retailers such as Target, for example, send an alert to customers when an item they looked at goes on sale.<\/p>\n Create your offers around a specific theme. Doing so will make it easier for people to grasp and remember your promotion. <\/span><\/p>\n An easy way to do this is to piggyback on holidays. Mother\u2019s Day, Memorial Day, Labor Day, and the like can always be used as themes. You should also consider piggybacking on \u201cunofficial\u201d holidays. <\/span><\/p>\n For example, on National Pound Cake Day, (March 4) BirchboxMan ran a promotion to entice people to \u201cgift\u201d a Birchbox subscription. <\/span><\/p>\n See if you can do something similar to your promotions. Find a holiday \u2014 even an unofficial one \u2014 that relates to your business and use it as a hook to draw people in. <\/b><\/span><\/p>\n Got a loyalty program? See if you could make it work with your promotion. If you play your cards right, you could drive member signups and sales.\u00a0<\/span><\/p>\n Why not offer a \u201cWelcome\u201d discount to entice new members? That\u2019s what Gymboree does for shoppers who sign up for their rewards program. Check out their coupon below.<\/span><\/p>\n Or, if you\u2019re looking to encourage spending among existing members, why not run an exclusive promo just for your loyal customers? <\/span>Turn it into an event<\/span>. Your loyal patrons will love the exclusivity, and you could gain a lot of sales out of it.<\/span><\/p>\n Nordstrom is a master at this. Every year, the department store runs an Anniversary Sale, and makes a major splash out of it. Several emails are sent out and Nordstrom\u2019s locations are all decked with Anniversary Sale decorations and promotional collateral.<\/p>\n In 2021, Nordstrom went all out by launching experiences , livestreams, and \u201cGlam Up Days\u201d in line with its Anniversary Sale.<\/p>\n You could also implement conditional promotions that are loyalty-specific. For instance, why not award extra loyalty points to shoppers who purchase specific items or spend a certain amount? Such promotions encourage spending while rewarding loyal customers at same time (win-win!)<\/strong><\/p>\n If you\u2019re feeling particularly generous (or if you really need to liquidate your stock), consider combining different promotions. Initiatives like \u201cTake an <\/span>additional<\/span><\/i> 20% off <\/span>already discounted<\/span><\/i> items\u201d can really grab shopper attention. <\/span><\/p>\n If you\u2019re selling online, try combining discount or BOGO offers with free shipping and see how your customers respond.<\/span><\/p>\n It\u2019s best to target your promotions towards specific customer groups. Consider creating customer segments according to gender, age group, or spending habits. <\/span><\/p>\n For example, if you want to run a sale for a specific brand or designer, you could create a group consisting of people who purchased that brand in the past, then run a promotion specifically for those customers. Or, let\u2019s say you have a group for your VIPs or top spenders. Why not send a special offer just for them? <\/span><\/p>\n Check out this example from Tiny Prints. The company ran a private sale for its VIP customers, and they sent a special email code to a select group of customers. <\/span><\/p>\n Promotions may bring about a large wave of sales, and you need to be able to implement your offers smoothly while tracking your transactions and inventory with ease.<\/p>\n You can\u2019t do that well if you\u2019re using a manual or cumbersome system. So, arm your store with a retail management system that enables you to run promos with ease.<\/p>\n See to it that the platform makes it easy to apply discounts and that your stock levels and sales are tracked effortlessly on the backend.<\/p>\n Vend\u2019s pricing and promotions features allow you to stay on top of pricing, discounts and markups effortlessly across all your products, outlets and customer groups. If you\u2019re implementing special offer or pricing, Vend has you covered.<\/p>\n Learn More\n <\/p><\/div>\n<\/div>\n Even with amazing promotions, your customers might still face hesitation when making a purchase \u2014 particularly if you\u2019re selling high-end merchandise. For these cases, try to find ways to make shopping at your store more \u201cbudget-friendly.\u201d<\/p>\n You can do this through flexible payment options such as lay-away, in which you take a deposit from the customer for a product, then set it aside until the shopper pays it off at a later day.<\/p>\n Not a fan of lay-away? Consider using a solution like Afterpay, a \u201cbuy now pay later\u201d solution that allows you to receive payment for purchased items upfront while letting your customers pay in four fortnightly installments. It\u2019s interest-free and when paid on time there are no extra costs for your customers.<\/strong><\/p>\n Doing so not only increases conversions, but it also entices your customers to spend more. We\u2019ve found that solutions like Afterpay can boost basket size by up to 20%.<\/p>\n Are you in Australia or New Zealand? Check out our integration with Afterpay. With Vend + Afterpay,\u00a0 you can offer a \u201cbuy now pay later\u201d service to customers, so they can pay for their purchases in four easy installments. Best of all, YOU get paid upfront, so you\u2019ll immediately have access to the funds.<\/p>\n Learn More\n <\/p><\/div>\n<\/div>\n There are no hard and fast rules when it comes to promotions. The \u201cright\u201d one will depend on several factors, including your products, customers, and price points. <\/span><\/p>\n The key is to come up with an offer that has a high perceived value while not overeating of your profits. It\u2019s a tricky balance, but when you pull it off, you\u2019ll see the results in your bottom line. <\/b><\/p>\n Now, we\u2019d like to hear from you. What\u2019s your favorite type of promotion? Let us know in the comments.<\/span><\/p>\n <\/p>\n Francesca Nicasio is Vend’s Retail Expert and Content Strategist. She writes about trends, tips, and other cool things that enable retailers to increase sales, serve customers better, and be more awesome overall. She’s also the author of Retail Survival of the Fittest, a free eBook to help retailers future-proof their stores. Connect with her on LinkedIn, Twitter<\/a>, or Google+.<\/p>\n<\/div>\n<\/div>\n <\/p>\n <\/div>\n![\"\"](\"https:\/\/www.vendhq.com\/blog\/wp-content\/uploads\/2021\/08\/iStock-1085149318-644x460.jpg\")
Quick take:<\/strong> Sales promotions can do wonders of your top line revenue, but running them successfully isn\u2019t just about putting up a SALE sign in your shop.\u00a0<\/em><\/p>\n\n
What are sales promotions?<\/strong><\/h2>\n
Types of retail sales promotions<\/strong><\/h2>\n
1. Percentage discounts <\/strong><\/h3>\n
![\"\"](\"https:\/\/www.vendhq.com\/blog\/wp-content\/uploads\/2017\/11\/Promotions-SephoraPercentageOff-644x372.png\")
<\/p>\n2. \u201cxx dollars off\u201d<\/strong><\/h3>\n
3. BOGO<\/strong><\/h3>\n
![\"\"](\"https:\/\/www.vendhq.com\/blog\/wp-content\/uploads\/2017\/11\/Promotions-ChipotleBOGO-644x513.png\")
<\/p>\n4. Multi-buys<\/strong><\/h3>\n
![\"\"](\"https:\/\/www.vendhq.com\/blog\/wp-content\/uploads\/2017\/11\/Promotions-BelovedMultibuy-644x514.png\")
<\/p>\n5. Multi-save and conditional promotions<\/strong><\/h3>\n
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6. Free shipping<\/strong><\/h3>\n
7. Try before you buy<\/strong><\/h3>\n
![\"\"](\"https:\/\/www.vendhq.com\/blog\/wp-content\/uploads\/2017\/11\/Promotions-ILMAKIAGE-644x311.png\")
<\/p>\n8. Gift with purchase<\/strong><\/h3>\n
![\"\"](\"https:\/\/www.vendhq.com\/blog\/wp-content\/uploads\/2019\/09\/Screen-Shot-2021-04-21-at-1.11.13-PM-644x400.png\")
<\/p>\nHow to decide on the right promotion <\/strong><\/h2>\n
Be crystal clear with your objectives<\/strong><\/h3>\n
Test, test, test<\/strong><\/h3>\n
Should restrictions apply?<\/strong><\/h3>\n
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![\"\"](\"https:\/\/www.vendhq.com\/blog\/wp-content\/uploads\/2021\/08\/Ebook_1_-_Sales_techniques_ebook-644x337.png\")
<\/p>\nHow to improve the performance of your sales promotions<\/strong><\/h2>\n
Bring about a sense of urgency<\/strong><\/h3>\n
![\"\"](\"https:\/\/www.vendhq.com\/wp-content\/uploads\/2017\/11\/iStock-458556839-1-644x429.jpg\")
<\/p>\nUse the customer\u2019s browsing or purchase history<\/h3>\n
![\"\"](\"https:\/\/www.vendhq.com\/blog\/wp-content\/uploads\/2021\/08\/Screen-Shot-2022-11-23-at-12.02.26-PM-644x482.png\")
<\/p>\nHave a theme<\/strong><\/h3>\n
![\"\"](\"https:\/\/www.vendhq.com\/wp-content\/uploads\/2017\/11\/Screenshot-2017-11-20-11.42.29-644x555.png\")
<\/p>\nTie in your loyalty program<\/strong><\/h3>\n
![\"\"](\"https:\/\/www.vendhq.com\/wp-content\/uploads\/2017\/11\/smartrmail-gymboree2-644x177.png\")
<\/p>\n![\"\"](\"https:\/\/www.vendhq.com\/blog\/wp-content\/uploads\/2021\/04\/nordstrom-anniversary-sale-644x520.jpg\")
<\/p>\nCombine promotions<\/strong><\/h3>\n
Implement targeted offers<\/strong><\/h3>\n
![\"\"](\"https:\/\/www.vendhq.com\/wp-content\/uploads\/2017\/11\/Screenshot-2017-11-20-11.44.11-644x418.png\")
<\/p>\nUse a solid retail platform to implement your promotions<\/strong><\/h3>\n
Vend Tip<\/strong><\/h4>\n
Be flexible with payments<\/h3>\n
Vend Tip<\/strong><\/h4>\n
Final words<\/h2>\n
![\"\"](\"https:\/\/secure.gravatar.com\/avatar\/1528013483dfdb53fd343748c2d53f66?s=100&d=mm&r=g\")
About Francesca Nicasio<\/h3>\n