Why your product business needs promotions...
Promotions have sometimes felt like a dirty word in retail and some brands have come into some criticism for doing a lot of it as part of their sales plan. Timing is often to blame and smaller businesses can sometimes feel pressured to join the likes of Black Friday because it’s literally all over every marketing channel you can find.
In this blog I will talk you through why your product business needs promotions, including:
- Why promotions are an important part of product businesses
- Using promotions in your product business to shift stock
- Using promotions within your product business to create space and cash
- Incorporating promotions within your product brand
- How to utilise promotions within your product business
- Timing your product business promotions
- Planning your product business promotions
Why Promotions are an Important Part of Product Businesses
Promotions though are an important part of retail business because they help you turn stock and create cash flow. As we know cash is the lifeblood of any product business so it’s important you understand how it fits into your model, but more importantly, how and when your customer might like to see them so you keep your brand perception where you want it.
And that’s why it’s important to actually plan these into your sales goals, knowing that you will use certain times and messages to help you keep those cash wheels turning also helps you plan investment in stock or tools and marketing that help you to get the growth you need to keep developing what you do creatively as well as financially.
Using Promotions in your Product Business to Shift Stock
Stock is your biggest investment and you can be holding thousands of pounds of it at any one time that you have to sell to be able to maintain your business. Suppliers can often need larger minimum order quantities than you’d like or your customer has not loved something the way you thought they would so it creates a pile of slow-moving lines that is taking up a chunk of your money.
The truth bomb here is that EVERY retailer has products that have not sold to forecast – you are not alone and that is why you need to plan in some promotions to help you clear down and create the cash you need to keep your business moving. Retail is a risky business and when you buy a product you think your customer will love you are taking a risk as they are fickle characters, a promotional plan can minimise that uncertainty a bit for you as you have that lever to pull when it’s needed.
Utilising Promotions within your Product Business to Create Space and Cash
As a product business you will naturally create everything to sell at full price so you gain the maximum profit possible from each sale. If you are a trend led business then it will be important to sell through in your season so you can create space for the next range you want to show your customers. You need to keep things fresh so your audience will always see you developing and leading the way.
If you don’t need to follow trends or they have much more longevity then it’s great you have longer to be able to sell out at full price. There will though be times though when you need to create cash to be able to invest in the infrastructure that supports you doing what you do, that could be your website or equipment and software that will help your brand to evolve and do more.
Whatever you sell there are very likely to be pockets of products that have not sold the way you wanted them to and these will be taking up that cash – you will need to promote to gain traction.
I would like to touch on ethics here too as I have spoken to a number of brands who sell sustainable products or ethically sourced goods who feel that promotions go against their values. You must try to think about them as a mechanic for your business, you can promote ethically and you can keep what you do to a minimum so you know you are offering genuine value to your customers.
Incorporating Promotions within your Product Brand
Some kinds of promotions have had bad press, supermarkets in particular in the past have had a lot of scrutiny in how they are perceived enticing people to buy with offers that may not always be the best value. Other retailers get a bad wrap for the number of promotions they do and that they appear to be never off sale.
This is where you look at how promotions fit with your brand and how you want to communicate with those that buy from you. You can promote with integrity and keep your stock flowing in the right way even if you have an ethically sourced business as long as you plan it for the right time and the right message for you.
As long as you are clear on the discount and you’ve been selling a good while for full price then your customers can feel confident that the discounts you give are genuine, that is what is important to promote with integrity.
How to Utilise Promotions within your Product Business
There are many ways to parcel up price investment (jargon for discount) so that you can fit it in with your brand. One thing you must do is think about who your customer, when they could want to shop an offer with you and how you communicate any kind of promotion. This will be key to maintaining your brand perception so using the right message is really important.
Some luxury retailers for example don’t always do big markdown sales and use an outlet model to sell through their excess stock, in fact, this can be quite profitable as it allows for volume sales on older products that didn’t sell well in their full price stores and on their website. Having an “outlet” page on your website means that you’re not using the “sale” terminology and it allows you to move those products that need some price investment to sell to sit together in one place. Your customers can browse this whenever they want and you don’t necessarily need to go on markdown on your main page. You can market this separately to your email list when more products are added rather than put sale banners across all your channels.
Timing your Product Business Promotions
If your customer likes to engage with a sale then you can time yours to coincide with when you will be looking to pay for your new season drops so that you’re creating the cash you need at the right time. You keep the number of promotions you do to a minimum but you could get a great response when you do with a bit of FOMO as there are limited time frames to get discounts from your brand.
Your customer may also have points of the year such as key gift giving or holidays when they will be looking to spend more, you can always use short and smaller discount weekends for example that give you a sales boost and give them a curated set of products that they might love with some added value. A bank holiday weekend is a perfect example, in the spring this is usually around mid-season so if you don’t want to do a full sale you could do a 4 day special promotion that will still sell down some of your higher stocked lines.
Planning your Product Business Promotions
However you choose to do it make sure you plan it in, there is nothing worse than a knee jerk rush job because you’ve waited too long to make a decision to go ahead and you slash prices left, right and centre. If you’re tracking how well your products are doing then you’ll know what needs some help to sell through and don’t forget every retailer will be in the same position if they are buying stock.
Look at when could be good, what message could work and how you will talk to your customers about it. Make it part of your sales plan and your cash flow will thank you for it.