SALES PROMOTION | MARKETING MANAGMENT| L-11|

What is sales promotion?

A sales promotion is a marketing strategy where a business will use short-term campaigns to spark interest and create demand for a product, service or other offers.

Sales promotions can have many objectives and ideal outcomes, which we will explore in detail throughout this article.

Primarily, sales promotions are used to motivate buying behavior or trigger an uptick in purchases in the short term, in order to reach a benchmark or goal. Although the immediate purpose of a sales promotion is an uptick in sales, there are plenty of other benefits to building out a strategic sales promotion technique with your marketing team.

The pros and cons of sales promotions

Some of the benefits to running a sales promo include:

Creating loyalty and enthusiasm for your brand

Increasing sales and revenue

Gaining valuable insights into customer behavior and price sensitivity

Strategically using sales promotions helps support a variety of business interests and keep your existing audience engaged with your offers.

The downside of sales promotions is that some businesses suffer from becoming overly dependent on them in an effort to boost sales. As a result, they enter a precarious short-term marketing cycle and struggle to plan for long-term goals and growth.

Take the “sales promotion trap” as an example. If you consistently run promotions, your consumers may come to expect them and only buy products or services when they’re on promotion. This can work to:

Devalue your brand

Make it difficult to sell products or services at your standard price point.

Howard Freidman, former CEO of Aptela (Now Vonage Business) speaks to this pain point:

“The trap is running constant promotions to spike sales. As a result, [owners and manufacturers] condition consumers to wait for them and erode their price integrity.”

Further, if your competitors also run tons of sales promotions, the market itself may be negatively affected. Bidyut Bikash Das, former Demand Manager at OYO, notes that, “…when a number of competitors extensively use promotions to differentiate products or services, and other competitors copy the strategy, [it can result in] no differential advantage and a loss of profit margins to all.”

Therefore, the definition of a good sales promotion is one that’s run strategically to work in conjunction with your sales cycle.

In addition, too many promotions can damage your business reputation because the offers no longer seem exclusive or valuable and clients begin to see your product or service as worth less than what you typically sell it for.

Overall, sales promotions are a powerful tool to rapidly inject sales, attention and demand into your business. To ensure they remain effective, they should be used strategically and with a specific goal in mind.

Although the main driver of running a sales promotion is to increase demand for a particular offer, sales promotions can help you to achieve multiple outcomes, depending on your end-goals.

Generate new leads

In the short-term, sales promotions can help you attract new leads or customers. However, this should also be seen as one piece in a long-term strategy, since you’ll need to continue to nurture these leads to move them along the sales pipeline or turn them into loyal customers that don’t churn.

An example of using a sales promotion to generate new leads is to offer a free trial for a SaaS tool so that potential customers can see if your product is the solution they’ve been looking for.

Or, if you’re selling a digital template at a reduced price, people may share it with others who could benefit from the discount as well. In this way, sales promotions are a great way to attract qualified leads for your sales team.

Introduce a new product, service or feature

Sales promotions are a great way to grab attention and increase demand when introducing a new product, service or feature that doesn’t yet have social proof within your market.