What a business needs is very simple, it needs customers. There are many ways to attract customers. What we want to discuss here is going to be under a simple term, Promotion.
Promotion is a term that can encompass many different ways of reaching customers. A business can have different types of customers. For now we are going to talk about three different classes of customers, regular customers, occasional customers and new customers.
Different business have different time cycles for customers. A car dealership may have a regular customer that only makes a visit once every three years or so. A restaurant on the other hand, could have a regular customer that visits several times a week.
Promotions are meant to bring more customers into a business than occurred in the last time cycle you want to compare. The increase must be measured against a baseline that makes sense for that event being measured.
A promotion for a restaurant could be based on last weeks sales versus this weeks sales. The success of any promotion must be measurable so the effectiveness can be understood. Is the promotion’s goal the number of people through the business, gross sales dollars or the increase (hopefully) in net profit over that time period.
What parameter of the promotion is being measured? What goal was set for that promotion? If you don’t know the goal of a promotion before the promotion you will never know it the promotion was a success.
So if the promotion was designed to attract just new customers, how did that work out and what technique was used to attract news customers. How did the try to get new customers affect your existing regulars? Did something you did within the promotion turn-off existing customer. Do you reward a new customer more than you reward a regular customer?
And last but not least, did the promotion help or hurt the bottom line?
There is an old saying; “We loose money on every one we sell, but we make up for it in the volume!” Is that a reality statement? Do you ever want a promotion to attract new customers to be unprofitable at the same time. Is this your risk – reward test?
Promotions and food for thought from MI Printing.