Are Your Clients Overdoing Their Sales Promotions?

promotions

As we enter 2019, your clients may be asking themselves whether they should spend more money on sales promotions or on increasing their advertising efforts. After all, the marketplace is more competitive than ever. And, in many product and service fields, it’s not easy to differentiate themselves from the competition. Analytic Partners has released its ROI Genome Report to show marketers how they may be missing the mark when they rely on sales promotions rather than advertising.

When Sales Promotions Work

Your clients definitely want to increase sales. But they also want to do so at a level that involves a profit. That’s why they need to focus on return on investment (ROI). Analytic Partners analysts point out that sales promotions such as coupons, discounts or free shipping definitely drive short-​term sales. These kinds of sales promotions also help attract new customers, especially during the launch of a new product. When was the last time you received a coupon or other form of a discount either in the mail or via email and didn't give it at least a second glance? Admit it, you were at least tempted to take action. Your client's customers are no different in their frugal thinking. What better time to try something new than when you can get it at a lower price?

The Power of Media Advertising

However, building new product awareness and brand through advertising is also effective at driving sales. The results of the Analytic Partners study indicate that media is “35% more efficient than sales promotions, on average.” This finding holds true “over time and across industries and geography.” This pattern is relatively new. Prior to 2013, marketers generally only experienced a big ROI from sales promotions.

The New Marketplace

What changed? Analysts point to two factors. First, marketers have been using sales promotions heavily in the past few years. This tendency is causing consumers to burn out on the idea of saving money. If the weekly email from a favorite marketer always contains a promotion, consumers will pay less attention over time since they know that another deal will always be on the way. The age of online shopping from smartphones means that consumers can easily determine whether an offer is a good deal when compared with the promotions of other major retailers in the field. They will bypass the deals that don’t include significant advantages for them.

Does this mean your clients stop their sales promotions? Not at all. However, they should invest more in advertising. When they do, they can expect an ROI boost that is two to three times higher than what they’ll get from promotions by themselves. In addition, you should talk to your clients about the timing of their promotions and advertising campaigns. Research shows marketers can maximize ROI when they use the following strategy: Use advertising media to build brand and follow up with a promotion.

To understand the kinds of advertising that influences consumer purchases, check out the AudienceSCAN reports available on AdMall from SalesFuel.

Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.