–Do you know which ones are working?

    Simple Questions. But sadly, most retailers and their vendors don’t REALLY have answers. Truth is, about 1/3 of all promotions don’t improve sales. Another 1/3 do not deliver incremental profit dollars to the bottom line. (They may drive volume, but the retailer puts no more money into the bank. So while throughput – and costs – increased, the effort didn’t drive value to shareholders.) So roughly 1/3 of all promotions are successful.

    But which ones?

    Years ago, I co-developed a patent for a retailer promotional dashboard. Building on that today, I think of promotional work falling into three areas:

    1. Planning – those tools (*cough* spreadsheets *cough*) that identify the items and their prices to promote, the forecast that drives the PO’s and the online and offline locations used in the promotion. It supports the process of promoting.
    2. Evaluating – a simple Stop/Start/Continue to evaluate which promotions met forecast and which ones need work to succeed. More on that below.
    3. Optimizing – Insights before execution that accurately predict how to spend promotional funds efficiently to deliver the greatest outcome.

    Here’s the thing: Too many retailers and their vendors confuse these three. Planning is not evaluating. Evaluating is not optimizing.

    Start with this simple promotional evaluation model:


    Which promo tactics increase promotional profit?

    • Adjusting price discount depths
    • Forecasting demand correctly to improve sell through
    • Buying correctly into vendor deals – including forward buying where warranted
    • Using the most effective channels and in-store locations to reach prospective shoppers

    Which promo tactics increase promotional volume?

    • Selecting the correct items to promote within a line
    • Forecasting demand correctly to eliminate out of stocks during the promotion
    • Promoting multiple unit offers like “Buy more, Save more” and 2 for…, 3 For… multiples
    • Selecting the best in-store and online locations for promo offers to attract shoppers

    What is exciting about working on promotions is the fast payback achieved by making corrections. The payback happens so quickly because all you really have to do is reduce the poor performing promotions and start making changes to drive sales and profits. Retailers can achieve volume and profit improvements in under 6 months. What’s more, they can reliably deliver across the board in a year. Outside of pricing optimization, that kind of speed to value is rare.

    To repeat, these are not incremental changes. Because there is so much opportunity in improving promotions, I have experience with retailers seeing 20-35% sales increases in promotional sales and 30-50% profit improvements. Because promotions are the leaky bucket of retail. Lots of effort to deliver weekly offerings. But no one really has the time and tools to properly evaluate and change future promotions. All of the effort goes into the planning and execution. But the real value happens when we test, learn and change.

    Do you need help improving your promotions? Do you even know? We’re experienced in helping retailers get the most out of their promotions. We’re ready to help.

    *Not all promotions that fail to drive sales and profit contributions are dumb. There are some promotions that have goals that are not tied volume and profits.

    • Promotions to introduce a new store location.
    • Promotions to introduce a new brand or technology to drive customer awareness – especially on high-priced, considered purchases.
    • Promotions to offensively under-price a competitor or beat them to market with a new item.
    • Promotions designed to sell a profitable market basket despite individual lead items selling below desired profit levels.