October 2, 2018

What is Promotional Risk Management?

Promotions have the power to develop and build lasting relationships with customers, increase customer retention, engagement and in turn drive sales. The best ideas are those that are ambitious, risky, exciting and disruptive in the market.  These may come at a cost, both financial and reputational if not executed correctly and where one fails to calculate and prepare for the risks involved.  So how can Opia help protect you from the unknown levels of redemption?

What is a promotional risk?

If your business wants to increase sales and entice customers with an innovative sales promotion you’ve got  to ensure financial security by removing the financial risk and protecting your P&L.

Assessing the risk and respective consequence is critical especially  if you want to avoid a PR nightmare and a stampede of unhappy customers.

What if you invested in a great sales promotion strategy that cost both time and  money to launch. You market the promotion to perfection. You’ve got the best digital marketing team pushing sales online and you’ve announced your latest gift to the world across all of your social media channels.

The promotion is ambitious and disruptive and before you know it you’ve got an avalanche of claims from happy customers, but there’s a problem with all this success. You didn’t anticipate such a massive wave of claims and you don’t have the tools, strategies or plans in place to accommodate such a large number of claims.

Let’s take a look at an example of this…

The 1992 Hoover free flights promotion.

The Hoover Company offered free airline tickets to customers who bought more than £100 worth of Hoover products. The promotion was an instant success and soon the promotion covered select destinations in Europe and  the United States.

Customer claims grew and grew, and Hoover found itself paying out rewards to the value of £600 against a customer spend of £100. In the end, Hoover had to pay circa £50m in rewards in the form of airline tickets and settle legal claims of those who didn’t receive their promised airline tickets.

The 2018 Build-A-Bear promotion.

The Toy retailer Build-a-Bear Workshop ran a ‘Pay Your Age Day’ promotion offering its customers the chance to buy a bear for the price of their child’s age at stores nationwide for one day only. Demand was huge, and the promotion ended in customers queuing for long waiting times and chaos in stores across the UK and America. So, what went wrong, and could it have been avoided?

They failed to predict just how much people loved a great bear sale and many shoppers were turned away after queuing for hours. How could Opia have helped avoid this? Foreseen the risk and prevented it?

Why should you invest in Promotional Risk Management?

Promotional Risk Management gives you the peace of mind, security, and freedom to run compelling sales promotions without  the need to worry about associated financial risks of over-redemption by locking down your costs, capping your liability and removing the risk of over redemption.

More reasons why having a Promotional Risk Assessment and Management company in your corner is beneficial includes the following:

1. Collaboration and Full Risk Assessment

The team will work closely with you to ensure they have an in-depth understanding of your goals and business challenges to assess the potential risks associated with any promotion. This collaboration combined with a wealth of experience of sales promotions enables us to give you peace of mind and do the unthinkable.

2. Minimises Financial Risks

Don’t hold back. With Opia you can run exciting and risky promotions while protecting the P&L and reputation of your company.

3. Complete Redemption Insurance

One of the most significant risks of running a sales promotion is the threat of over redemption but with Opia’s Over Redemption Insurance, regardless of over-redemption, your total cost will always  remain fixed.


Want to find out more? Get in touch with a member of the Opia team today! We’d love to hear from you!