SAN FRANCISCO — Tracking results is critical to an effective and efficient marketing plan. Specific product promotions can be tracked by the sales boost in the targeted product or service. A goal of a boost in sales equal to 15 times advertising cost is realistic.
Segregate the results on the specific product from the general increase in sales that results as a benefit of the marketing, and track both outcomes.
Service introduction promotions can serve dual purposes of increasing sales in the given service and increasing sales in general due to the added exposure. We have often seen a general increase in sales when a competitor enters the market and the existing cleaner runs defensive promotions.
Branding campaigns can be measured by sales trend changes.
Kyle Matthews, director of sales and marketing for Janet Davis Cleaners, Berkley, Michigan, describes that business’s tracking process: “We choose our actual spending by doing our best to track each source to identify what works and what doesn’t. We ‘tag’ new customers that redeem coupons... Then we run reports later, utilizing these tags to see what sales were generated from each campaign each year.”
Since the most common approach to marketing in our industry is to use discounts, the analysis will start there.
Discounts are easy to analyze because they are:
- Easy to promote,
- Easy to track,
- Easy for your staff to talk about, and
- Potentially quick-cash generators.
The results can be easily obtained through your POS system by measuring:
- The sales on the promoted item
- The total sales increase over the comparable period
- The number of customer touch points
- Customer actions and feedback
Also, watch for and measure the negative impact of discounts, which can threaten your business.
Giving the Impression of “Fake” Pricing — Reduced pricing gives the consumer the idea that your “regular prices” are higher than they should be and that you are systematically overpriced. This consumer impression that “regular” equates to “inflated” is so pervasive that the federal government and many states have passed very strict laws about advertising that incorporates price comparisons.
Measurement: Does the service usage drop after the sale and only recover on the next sale?
Special Pricing to Select Customers — If special pricing is offered to attract new customers only, your existing customers feel poorly treated and may even leave to become a new customer elsewhere.
Measurement: How many regular customers comment or request the “new customer” pricing?
Full-Price Business — Full-price business will be diverted to lower revenue per piece and result in lower profits.
Measurement: Calculate the total cost of the product, including fixed costs, variable costs, promotional expense, overtime, failure to meet standards on other product categories during the sale, and damage to quality reputation if plant or system is overwhelmed by increased volume on sale item. Weigh all the costs against the net sales increase.
Waiting for Sale — Your staff may encourage customers to “wait for the sale” thereby delaying current business.
Measurement: Are the sales results suppressed in the period immediately before the sale?
Discounting Regularly — A steady stream of discounts will cheapen your brand and may actually drive away your best customers who question your motives, financial health and future stability.
Measurement: Customer retention of top 20% of customers by revenue.
Attracting Price Shoppers — Discounting also attracts price shoppers, a uniquely fickle audience that will hop to whomever has the lowest price.
Measurement: Retention of customers that used the discount.
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Have a question or comment? E-mail our editor Dave Davis at [email protected].