One of the most important things you can do when creating a promotional campaign is to set clear goals and objectives.
This key first step will help you choose which kind of promotion to run, and help you see much more success once you actually start the promotion.
So how should you go about setting goals for your next promotion?
What’s your key objective?
Promotions may have multiple objectives, but there should always be an underlying or primary goal. It will probably be one of the following:
- Gain new customers
- Retain existing customers
- Increase average customer spend
- Improve purchasing during slow periods
- Regain former or lost customers
- Product launch
Sure, the easy answer is ‘All of the above’. But for any promotion to work effectively, it should focus specifically on a key objective. By determining what exactly you want to accomplish, you’ll not only give your promotion a better chance of success, but also find it easier to track your results during and at the end of your campaign.
So before starting on your campaign, confirm and put in writing what you are trying to achieve. That's the first step.
Use customer personas
For a promotion to achieve maximum effectiveness you have to know a lot about who you’re trying to target. Once you’ve determined the segment you’re going after (for example, existing customers, ideal customers, or lost customers), you’ll need a really good understanding of the group.
Create personas that describe who you are targeting and why they are interested in your product. Include information like their age, habits, hobbies, likes and dislikes, as well as their goals in relation to your product and any objections they might have to buying your product. All of this information will help you tailor your message to this audience.
Know the difference between business and financial goals
When determining your goals for an upcoming promotion, it will help to consider how your business can benefit from both:
- Business objectives
- Financial / sales goals
Aren't these the same thing? After all, more sales is always good for business.
In a manner of speaking, that's true. But where these sales are coming from and how the customer experiences them may be important for you too.
Is it important for you to offload a large amount of stock and recoup revenue, without concern for how you achieve this? Or are you looking to increase the lifetime value of your customers through increased brand loyalty and engagement?
Different business objectives will call for different promotional strategies.
Sales or financial goals are the easiest to measure. For example, you may want to break into a single digit percentage of a new market within 5 years. Alternatively, you could look to increase weekly sales targets by 5 percent over the summer. Or you may have a specific revenue goal you’re trying to reach each month. All of these are relatively simple to measure and will make it clear to you what success looks like.
If using sales volume as a measure of success, consider using the following equation to determine how much greater your sales were in comparison to a regular period:
Overall lift in sales = Lift in promoted items sales + Halo - Cannibalisation - Pull forward
- Lift in promoted items sales: the difference between baseline and new sales volume.
- Halo: The effect of promoting one item which leads to sales of another item.
- Cannibalisation: When promoted sales eat up sales of another item
- Pull forward: When consumers 'stock up’ on a promoted item leading to a future dip in sales.
You may decide to offer a promotional trade up program on a new vacuum cleaner. Assessing sales volume uplift might mean some cannibalisation, but probably not too much pull forward. Similarly, if the vacuum cleaner is part of a range of home appliances, you might see a halo effect on others in that range.
Business goal alignment
A business goal relates to your company’s overarching objectives. For example, having the best customer support in the industry isn't always easy to measure, but you might aspire to it as a business. If this is important to your business, you want to make sure your promotion adheres to this goal. Say you’re launching a new product through a promotional campaign… You need to ensure you have the capacity to provide excellent customer service to everyone who starts using that product. Which means:
- Enough staff with the correct technical expertise to answer customer’s queries
- Information that’s readily available to customers
- Simple methods and channels for customers to reach you
- A way to collect feedback
Without these structures in place, your business and sales goals don't align. This could lead to problems in the future and may undermine the key objectives of your promotion.
Develop your strategy with both business and financial goals in mind
A good strategy helps define your promotion. There are many different types of strategies but simpler is usually better. Keep your plan on point by using the SMART anagram for structure:
- Specific – What do you want to achieve? State your objective clearly.
- Measurable – Use a tangible metric to measure results. For example, number of items sold, revenue generated, or number of feedback surveys completed.
- Achievable – Set goals that are feasible, taking into account your capacity and budget.
- Relevant – Ensure any financial goals are relevant to your businesses overarching goals.
- Time – Define the time it will take to achieve your goal.
Place your business first
Promotions are a great way to drive business growth, but what's really important is to align promotional strategies with business needs and measure their ongoing success.
Remember, focus on a key aim and balance sales goals with business objectives.
If you take the time to really consider your goals, you’ll create a much better promotional strategy from the outset, meaning you’ll see much better results.