First things first. Running a promotional campaign is not a strategy in itself.
A promotional campaign is only a tactic (it can be a useful one) but there’s no way to know how well it’s working unless there’s already a big picture view to give it context. The key here is measurability. And to measure success there needs to be a baseline. For a new shop, this might be largely theoretical but for an established shop there could be years of analytics.
In a bigger view, a successful promotion will fit into the existing sales funnel at multiple points. This is how we know whether a sale came in from the customer seeing the an image on Facebook, from a newsletter link, or came across it while browsing the store.
Have a Plan
In an even bigger view, running the promotion will ideally be part of a tactical campaign within an overall online marketing strategy. The tactical outcomes we’re looking for from running a promotion could be:
- Improving shopping cart conversion rate
- Increasing the value of individual orders
- Raising brand awareness and/or brand loyalty
Improving Shopping Cart Conversion Rate
There are a slew of ways to affect conversion rate with promotions but at the top of a lot of people’s lists would be free shipping. Shipping costs can really add up depending on item weight, geography, and the shipping carrier. Shipping and handling costs that are considered too high are a key reason for shopping cart abandonment. Incidentally, displaying shipping costs late in the checkout process also rank high as a reason why a customer abandons a transaction. Free shipping can have a great effect on sales but the costs to a store can add up. This is especially true of heavier items. Caution with this one is in order. It is best applied to lighter weight products or when margins are wide.
Increasing the Value of Individual Orders
A number of promotions can help boost the size of an order.
- Giving away something free with a minimum purchase is a good start. The free add-on could be a new product that you want to promote, a discount on the order, or free shipping (yes, again). You’ll want to set the minimum to be just above your store’s average order value (AOV) so the effect will be noticeable.
- Bundle products and apply a volume discount. As with all discount offers, they cost you money. Weigh the cost to your store of applying the discount against your predictions for increased sales. A bump in sales when using a discount doesn’t necessarily mean an increase in profits.
- Upsell and cross-sell whenever you can. This isn’t really a promotion unless a discount is applied but it is always good practice and can boost the size of an order. Briefly, upselling is when a customer is browsing a basic product and you entice them by displaying the premium version right next to it. Cross-selling is presenting the customer with an offer for a companion product. Think of that bluetooth keyboard to go with that new tablet.
Raising Brand Awareness and/or Brand Loyalty
Branding and brand awareness is, no exaggeration here, a huge topic. I’m not going to get into that all right now but we can still talk a bit about how a promo campaign can help.
A great way to use your promotional campaign to raise awareness about your products and brand is a buy one, send one to a friend promotion. Logistically, this is a promo that’s best used with inexhaustible digital products or very inexpensive physical products. After the customer makes a purchase, they could be given a promo code for a free product that could they can send to a friend.
Test, Test, and Test More
You’ll never know what’s working and what’s not with your campaign with metrics and analytics. The metrics to watch closely are AOV, your total number of sales, cart abandonment, and revenue.
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Photo courtesy of Lars Plougmann
