How Monitoring Promotions Helps Your Business
If your sales have stagnated or you are not seeing sufficient business growth, it might be time to run a promotion. Sometimes it’s as simple as that to kickstart sales again. However, there is a right way and a wrong way to run promotions.
Promotions, whether discount promotions or regular marketing campaigns for your retail store, continue to be the lifeblood of a retail operation.
To go from average promotions to standout promotions, you need to use the power of monitoring. Only by collecting data from past promotions then iterating your approach for the future can you ensure substantial growth.
Promotions All Year Round
The retail calendar has become much more packed nowadays than it used to be in the past. Traditional big days like Christmas and New Year’s Day are just landmarks in a series of promotions. Right through the year, retailers of all stripes have learned to run promotions whenever the opportunity presents itself.
Shoppers have also learned to watch for promotions at all times of the year. This helps them snag deals on the goods they want regardless of what season it is. According to Talon
, for instance, around 34% of Millennials look for online coupons on a weekly basis.
Monitoring Is Essential For Knowing ROI
It’s easy to fall into the routine of running promotions out of habit without measuring their effectiveness. In the long run, however, this “flying blind” approach can mean you lose out on lucrative promotion opportunities.
Even worse, you might be cutting off your most effective promotions too early.
Measuring and monitoring your promotions lets you learn the return on investment (ROI) from your promotions. Return on investment is an overall measure for the positive or negative impact of promotions on your business.
Pragmatic Monitoring Approach
Smaller retail stores might only run a handful of promotions during important retail events. Such stores often have small budgets and little time to invest in comprehensive promotion monitoring.
Due to these constraints, we recommend a “pragmatic” monitoring approach
for these stores. This is an approach that does away with the bells and whistles while capturing the most important insights.
Measuring Additional Revenue Per Promotion
One of the simplest approaches you can take involves comparing your sales over a promotion time period versus other times.
For example, suppose you ran a month-long promotion event in the month of March. You then compare the total sales figure for March to the average monthly figures for February and January.
This will allow you to come up with an approximate figure of additional revenue that is attributable to the promotion.
You can then take the additional profit figure and compare that to the total cost of the promotion. Costs might include advertising budget, labor expenses, and any materials used.
Understanding And Improving Your Results
There are, however, some pitfalls with this rather simple approach. For one, it only compares sales over the promotion to the two prior months. You might want to compare against average monthly sales for the whole preceding year.
Even then, however, you might be running promotions at other times of the year. As a result, your assessment of the benefit of a single promotion might be too low or too high.
A Second, Comprehensive Approach
When you are working with larger budgets, simple estimates won’t suffice. This is because even minor percentage differences in your estimates could cost the business a ton of money.
Larger retail operations can also afford to spend more on labor costs to accurately measure and monitor promotions. In such cases, a more comprehensive approach works better.
The 5 Step Monitoring Approach
With modern tracking tools, you can run campaigns and monitor their effectiveness with pinpoint accuracy.
Analytics tools such as Google Analytics, UTM (Urchin Tracking Module) tags
, and plenty others are available to help with this. Larger teams will often have dedicated analytics teams and experts to help design the monitoring framework.
A model we recommend and which is used by numerous organizations involves the following essential steps:
- Step 1: Define KPIs (key performance indicators) for the promotion. These are the variables you want to improve, such as revenue, average order value, or average customer ratings.
- Step 2: Define specific goals for the promotion. This could be, for example, improving conversion rate in your online store or increasing repeat orders.
- Step 3: Rank your KPIs in order of importance. You might want to raise both conversion rates and average order value, for example, but decide that conversion rates are more important.
- Step 4: Once the promotion runs, score it on the various KPIs and goals you set for it.
- Step 5: Analyze the results and then make optimizations for your next promotion.
Each retailer or manufacturer will implement these steps to varying degrees of complexity. Both large enterprises and smaller retailers can apply the overall model to gain actionable insights.
Benefits Of The Comprehensive Approach
A couple of important benefits make the monitoring approach above ideal.
First, it allows you to measure the effectiveness of promotions with a reasonable degree of certainty. Secondly, the information you collect can be quite detailed, allowing you to compare multiple promotions against one another.
By measuring your campaigns in this way, you can spot the underperforming ones and drop them. You will also be in a position to modify your promotion methods to get better results with future promotions. For example, you might discover that a certain channel converts better for your online store and decide to use it more heavily.
Do You Need Advanced Tools Like AI, Big Data
As you increase the frequency and reach of promotions, your promotion activities start generating ample amounts of data. In the old days, it was routine for this data to go to waste.
Nowadays, however, tools like big data and AI(artificial intelligence) can help you make use of this data to improve your results.
Expanding The Scope Of Insights
Using unwieldy spreadsheets and other manual tools makes it hard for decision makers to draw accurate conclusions about promotions tracked in this way.
Adding a big data solution to your promotions can make monitoring automatic and more powerful. Big data solutions will analyze numerous customer interactions and data sources.
Such data sources include, for example, internal data such as past sales, ad campaigns, and market research. In addition, external data sources can be analyzed easily with such tools in order to analyze the impact of factors such as competitor campaigns, events, and even the weather.
Making Promotions More Effective
If you’ve never applied big data tools to your promotions, you might be uncertain about the benefit of such technology investments. According to a Forbes opinion
, however, AI and big data can help you run promotions more successfully in at least two ways.
The first of these is that applying big data can show you the social media posts you should boost, taking into account factors such as timing as well as audience.
Secondly, AI and big data can show you the campaigns that are not cost effective. This saves you money since you can avoid such promotions altogether.
At Competitor Monitor, we are advocates of data tools that help your business make more sales or lower costs. For promotions, competitor price monitoring can help tremendously with your timing.
Our monitoring tools
help you spot the right moments to offer discounts or promote a product in your store. This makes it easier for you to run promotions with higher overall profits.
The Monitoring Advantage
To make your promotions more effective, you should never “fly blind” without an effective monitoring solution. From a basic approach that takes minimal investment to comprehensive monitoring solutions, there’s a level of monitoring that works for each business.
At a bare minimum, your monitoring setup should enable you to accurately assess the profitability of promotions.
Thanks to tools like big data and price analytics, you can run promotions more effectively than was possible in the past.