What are sales promotions?
Sales promotions are marketing activities in which a business creates a compelling reason to buy without a costly impact on a brand’s bottom line compared to discounting strategies.
The intelligence and creativity behind the incentives in our disruptive sales promotion methods remove buyer hesitation and replace it with eagerness and confidence, delivering your brand an enhanced sales uplift, as well as increased customer retention.
How does a sales promotion work?
Sales promotions are tools used in marketing strategies to showcase a product deal, motivating the consumer to buy. By using attractive incentives, good sales promotions, which can be tactical sales promotions or strategic sales promotions, drive demand, leading to an increase in sales, basket size and increase average order values.
Opia works with its clients as strategic promotional partners, understanding their business and seeking insight from their markets and customers’ behaviour to create innovative promotional ideas. By managing the campaign end-to-end, including taking care of any financial exposure when delivering our sales promotion services, Opia ensures mutual value is offered to clients and customers.
Types of sales promotion (with examples)
1. Coupons and Vouchers
Coupons and vouchers offer customers a partial refund or discount on their purchase, increasing the purchase incentive while giving greater control over price positioning. This approach is more cost-effective than traditional discounting. By using cashback promotions, brands can drive purchases while maintaining their price integrity.
Example: A consumer electronics store offers a £50 cashback voucher on all smartphone purchases. Customers receive the cashback after submitting proof of purchase, encouraging them to buy without immediately reducing the product’s price.
2. Trade-In Programs
Trade-in programs encourage customers to exchange their old products for new ones, often with additional benefits like trade-in cashback, trade-in rewards, such as digital gift cards, or physical gifts. This approach generates urgency and helps clear out older inventory. Trade-in promotions also align with sustainability goals by promoting recycling and responsible disposal of old products.
Example: A laptop retailer allows customers to trade-in their old laptops for a £100 discount on a new model, plus an additional £50 gift card. This strategy encourages customers to upgrade their devices sooner and increases sales of new models.
3. Buy & Try Promotions
Buy & Try sales promotions, also known as money back guarantees boost confidence in new product lines and remove barriers to purchase by offering a risk-free, no-obligation trial period. Customers can return their product and quickly obtain a refund during this time, significantly reducing hesitation and encouraging purchases.
This strategy is ideal for increasing the adoption of innovative products or incentivising the purchase of higher-value items.
Example: A tech company offers a 30-day risk-free trial for their new smart home devices. Customers can return the products within the trial period for a full refund if not satisfied. This promotion encourages hesitant customers to try the new technology, leading to higher adoption rates. Buy and Try works best during the consideration phase of purchase and can help to drive brand preference over similar competitor purchases by removing the risk of purchase. As a result, we often see an increase in average unit prices, as customers are encouraged to spend a large percentage of their budgets.
4. Referral and Reward Programs
Referral and reward programs increase brand awareness and customer loyalty by rewarding customers for referring new customers or making repeat purchases. These programs leverage the power of word-of-mouth marketing and can significantly amplify your customer base with minimal cost. Referrals and recommendations from Friends and Family are the most trusted type of recommendation – imagine motivating your loyal install base of customers with incentives to encourage them to recommend your products. Our research shows that it is important that both the person referring and the person buying the product both receive the same reward value.
Example: A subscription service offers a free month of service for every friend referred who signs up. This motivates existing users to promote the service and brings in new customers at a low acquisition cost.
5. Gift with Purchase
Gift with purchase promotions provide an additional product or service for free when customers make a purchase, increasing the perceived value and encouraging higher sales. These gifts can be tailored to customer preferences, enhancing the overall shopping experience and driving loyalty. Ensure that the reward the customer is receiving is one that is useful and desirable to your target customer. This could be a complimentary product, software, services or digital gift cards.
Example: A beauty brand offers a free make-up bag with any purchase over £50. This not only makes the offer more attractive but also encourages customers to spend more to qualify for the gift.
6. Instant Win Promotions
Instant win promotions create excitement and drive immediate purchases by offering customers the chance to win prizes instantly upon purchase. These promotions can significantly boost engagement and repeat purchases, as customers are enticed by the possibility of instant rewards. Since not all customers receive the reward we are able to concentrate the budget into even bigger prizes, which can gain further interest from customers. 1 in 10 or 1 in 20 customers win for free are a popular way to use the concentrated budget to reward some customers and be able to use the powerful free message.
Example: A snack food company runs a campaign where customers enter codes found inside packaging for a chance to win instant prizes like gift cards or exclusive merchandise. This generates buzz and encourages repeat purchases as customers try their luck multiple times.
Other types of sales promotions
- Free Trials and Demos: Free trials and demos provide customers with a no-obligation trial period for new products, removing barriers to purchase and boosting confidence in new product lines. These promotions can significantly reduce customer hesitation, making it easier for them to experience the benefits of a new product firsthand.
- Competitions and Giveaways: Competitions and giveaways engage customers by encouraging them to participate in challenges or social media activities for a chance to win prizes, creating buzz and rewarding loyal customers.
- Flash Sales: Flash sales offer significant discounts for a very limited period, creating a sense of urgency and encouraging quick purchase decisions.
- Product Bundles: Product bundles involve selling a set of products together at a discounted rate, offering greater value than purchasing items individually, and often boosting overall sales.
- Buy One, Get One Free (BOGOF): BOGOF promotions offer an additional product for free or at a discount when one is purchased, encouraging customers to buy more and share with others.
- Early-Bird Specials: Early-bird specials provide discounts or special offers to customers who make a purchase early, incentivising prompt buying and increasing initial sales.
- Donations and Charitable Promotions: Donations and charitable promotions dedicate a portion of purchase proceeds to a charitable cause, enhancing brand image and building customer loyalty by supporting important causes.
What are the benefits of sales promotions?
Here’s how sales promotions can benefit your business and drive growth:
1) To increase sales
Increasing sales is a goal that almost every business seeks to achieve, and sales promotions are a highly effective method of accomplishing it. Sales promotions can drive immediate sales and generate revenue for your company.
By offering cashbacks, discounts, time-limited offers, or other incentives, you can attract more customers and encourage them to make purchases. Examples of sales promotion tools, such as ‘buy and try’ or ‘satisfaction guarantee,’ give the customer reassurance to make the purchase.
2) To protect margins
Untargeted price discounts are an extremely costly way to drive volume, not all customers need the discount to purchase, some are happy to pay the full price. Thus by focusing your investment on the most engaged and responsive customers, another benefit of sales promotions is achieving similar results at a fraction of the cost.
Sales promotions like ‘cashback,’ ‘instant win,’ or ‘gift with purchase’ strategies heighten the perceived value of the product and make the deal more attractive, creating urgency for short-term results.
3) To introduce products to new markets
Sales promotions can be used to introduce products to new markets where there is product unfamiliarity. By either building confidence in the product or presenting the customer with a compelling incentive, sales promotions remove barriers to the buying decision.
Special deals or introductory offers can entice prospective customers to try a product or service and encourage them to switch to your brand, increasing your customer base.
4) To increase brand awareness
Sales promotions can create buzz and generate attention for your brand. With exciting offers and engaging campaigns, they get people talking, increasing brand visibility and audience reach. Creative sales promotions, such as referral and rewards programs, motivate customers to share the product and the brand with peers to obtain a reward.
Meanwhile, strategies like instant win sales campaigns generate excitement in the market and make your brand part of the conversation.
5) To get ahead of competitors
In today’s competitive climate, gaining the edge over your competitors will help your business grow and succeed. Implementing different types of sales promotion techniques can drive action from your customers by making the deal on your product more appealing than the alternatives on the market.
Sales promotions can differentiate your brand from others in your sector by offering better deals, added value, or attractive incentives, enticing customers away from competitors and increasing your market share.
6) To obtain customer loyalty
Sales promotions are used to retain existing customers and attract new ones. Offering exclusive deals or rewards to your current customers can strengthen their loyalty and encourage repeat purchases. By registering details to obtain promotional rewards, customers connect with your brand and open up future communication opportunities to encourage brand loyalty. Being able to build a list of engaged opt in customer data base brands can maximise long term customer value. This is particularly helpful for brands that do not sell direct, and are at an arm’s length to their customer, as the customer is buying via a retailer.
7) To partner with dealers or retailers
Running a sales promotion campaign that benefits your dealers or retailers, as well as your customers gives your brand an advantage over competitors. For example, a ‘basket boost’ campaign requires customers to purchase accessories from the retailer alongside your product to qualify for cashback rewards.
This approach ensures dealers favour your product, promoting it ahead of other alternatives.
8) To target slow-moving stock
Sales promotions can be designed to target specific product lines or services that are slow-moving, end-of-season, or excess stock that you wish to clear out. By offering discounts or bundle deals, you can quickly sell off surplus stock, freeing up space and capital for new inventory, and encouraging the selling of your latest and greatest products.
9) To upsell and cross-sell
Sales promotions can be an effective strategy to encourage your customers to upgrade their purchases (upselling) or buy complementary products (cross-selling). For example, you can offer bundle deals or incentives for purchasing higher-value items. These promotions will increase the average transaction value and your business’s overall revenue.
10) To build valuable data and customer insights
Sales promotions provide an excellent opportunity to gather customer data and insights. Often, they require participating customers to provide their details or engage in specific actions, such as signing up for newsletters or filling out surveys. This requirement enables your business to collect valuable data on your customers, their preferences, and buying behaviour, which can inform future marketing efforts and personalised targeting.
Successful examples of sales promotion
Increasing Sales
Dell’s Small Business Cashback Promotion
Dell aimed to boost sales on Dell.com during key times of the year. Opia created a cashback promotion for a range of Dell products, offering customers $100 to $200 cashback. Customers could claim their cashback online upon product dispatch, receiving a Dell-branded digital VISA prepaid card.
This promotion not only increased sales during critical periods but also strengthened brand loyalty, demonstrating the power of Cashback Promotions.
Lenovo’s Environmental Trade-In Campaign
To highlight its commitment to sustainability, Lenovo partnered with Opia for an Earth Day trade-in campaign. Small and medium businesses received 20% cashback on selected Think laptops and PCs when trading in old devices. For each trade-in, Lenovo planted a tree in the UK, offset at least one tonne of CO2 emissions in the Amazon rainforest, and ensured the devices were refurbished, reused, or recycled with zero going to landfill.
This campaign promoted sustainability while boosting sales, illustrating the benefits of Trade-In Promotions.
Dell’s Premium Range Promotion
During the back-to-school and Black Friday periods in France, Dell sought to increase market share in the premium PC segment. Opia created a multi-tiered cashback promotion on Dell’s XPS, Alienware, and Inspiron product families. The promotion offered up to €200 cashback, driving a 25% increase in sales in the XPS and Alienware ranges.
This successful approach also protected Dell’s price position, demonstrating the effectiveness of Cashback Promotions.
Conn’s HomePlus “Get Your Tax Back” Campaign
Conn’s HomePlus aimed to attract customers with a unique promotion. Opia designed a “Get Your Tax Back” campaign, allowing customers to claim the value of state sales tax on purchases over a certain amount. The promotion worked both in stores and online, and its success led to variations like “Ca$hBacktober” and “Memorial Day Mattress Tax Back.”
This initiative showcased the versatility and appeal of Instant Wins.
Building Confidence
Samsung’s Buy & Try Promotion
Samsung aimed to drive the adoption of its premium Galaxy Z Series foldable phones. Opia developed a Buy & Try campaign offering a 60-day trial period. Customers could return the phones if unsatisfied, reducing buyer hesitation.
The promotion ran in ten countries and supported the launch of new models, effectively driving sales and customer acquisition through Buy & Try Promotions.
Enhancing Customer Loyalty
Samsung Wallet Rewards Customer Loyalty with Cinema Vouchers
Samsung sought to reward its loyal customers and promote the relaunch of its mobile payment app, Samsung Wallet. They collaborated with Opia to design a rewards promotion where users could win cinema vouchers. Participants registered in their Samsung Wallet App and entered daily draws by making payments with Samsung Pay.
This month-long promotion, which offered over 9,500 cinema vouchers, successfully engaged customers and reinforced Samsung Wallet’s new capabilities, showcasing the effectiveness of Instant Win Promotions.
LG’s Streaming Service Promotion
LG sought to motivate retail partners and boost sales for its Home Entertainment products. Opia created a promotion offering a $100 credit for streaming or gaming services with the purchase of an LG TV.
This gift with purchase generated excitement and increased store traffic, highlighting the impact of Gift with Purchase promotions.
Driving Engagement
Samsung Watch Promotion
Between the Christmas and New Year period, Samsung wanted to maintain their brand presence and drive sales of their flagship S Series phones. Opia created a promotion offering a free Galaxy Watch Active with the purchase of an S Series phone. This campaign used health and sports technology to promote the phones, driving high levels of engagement and showcasing the integration between Samsung’s smartphones and wearables.
This demonstrates the effectiveness of Gift with Purchase promotions.
Howard’s Tax Back Promotional Event
Howard’s, a leading appliance retailer, sought to engage customers during the busy July 4th period. Opia created a ‘Tax Back’ promotion, allowing customers to claim the value of state sales tax on purchases over $300. This promotion was available in-store and online, with rewards offered via PayPal or physically.
This redemption promotion saved Howard’s over 46% compared to traditional discounting methods, illustrating the impact of Instant Wins.
Tips for building successful sales promotions
Set clear goals and KPIs
Establish specific, measurable objectives for your promotion, such as boosting sales of a particular product line, clearing out end-of-season stock, or attracting new customers. Clear KPIs will help you measure the success and guide the implementation of your campaign.
Understand your target audience
Tailor your promotions to meet the needs and preferences of your target market. Use customer data and insights to design offers that resonate with your audience, whether it’s through discounts, cashback, or free trials.
Leverage technology for seamless execution
Utilise digital platforms to manage your promotions efficiently. Ensure that the claims process is straightforward, tracking is accurate, and customer interactions are seamless. Platforms like Opia’s CLOUD can facilitate a smooth process from purchase to reward.
Create a sense of urgency
Incorporate time-limited offers to encourage quick decision-making and purchasing. Urgency can drive immediate action, increasing the effectiveness of your promotion and boosting short-term sales.
Offer value without eroding prices
Use promotions that maintain your product’s price integrity, such as cashback offers or buy & try campaigns. These strategies provide value to customers while preserving your brand’s perceived value and avoiding price wars.
A bespoke approach to your brand’s requirements
Whatever commercial goals your business has, Opia will tailor a promotional idea to be unique to your needs and innovative to drive action from your target market. By working closely with our clients, we design bespoke promotional solutions that offer the best value for you and your customers.
Discover more about how we can increase your sales revenue with our different types of disruptive sales promotion solutions or get in touch with us to see how we can help you.