Effectiveness of Sales Promotion

By Miranda Brookins, eHow Contributor

updated: September 26, 2009

A sales promotion is a tool used to get customers to buy a product or try a service. Sales
promotions can come in the form of coupons, rebates, sweepstakes, contests, discounted pricing,
point-of-purchase displays, trade shows, demonstrations, premiums and sampling. Typically,
before a sales promotion is put into action, a company evaluates its market. If a sales promotion
is warranted, the company comes up with a clear, measurable objective they'd like to accomplish
through the promotion.

Goal
1. Sales promotion goals vary depending on the product or service being promoted. Some
common goals are to increase sales or awareness, remind customers about a product or
service, introduce a new use for a product or service and change customer's
attitude/opinion. Using a combination of goals is useful depending on the research a
company gathers initially regarding their market. The most important thing is to select a
goal that is measurable; otherwise, it's hard to gauge the effectiveness of a promotional
campaign.

Inform
2. A sales promotion constructed to inform customers about a new product might include an
advertisement in a local paper explaining the product and inviting customers to visit a
Web site for a coupon offer. An activity like this can be measured by tracking the number
of people who receive the paper, the number of people who visit the Web site, the
number of people who download the coupon and the number of people who actually use
the coupon.

Remind
3. Reminding customers about a product or service is just as important as an initial product
introduction. Something as simple as setting up an in-store display with coupons or
having customers complete a survey to indicate how often they use the product keeps
brands fresh in consumers' minds. Information gathered from the survey can expose how
often customers use a product, how familiar they are with a product and if they plan to
use it more in the future. Couple this with a discount coupon and you can even track the
number of people who make a purchase after completing the survey. A follow-up survey
can assess things like customer satisfaction and likelihood for a repeat purchase.

Sales
 4. Besides just handing out coupons, another great sales promotion technique is price
discounting. Whether its 50 percent off, buy-one-get-one-free or taking 10 percent off,
reducing cost is a sure way to motivate customers to buy. To track the effectiveness of
this type of promotion, sales can be tracked based on the number of units sold and the
total sales. You can even track how customers in certain areas buy compared to others.

Warnings
5. Sales promotions are a great way to inform and remind customers about your products.
Ultimately, the main objective of these activities is to increase revenue. Weigh the cost of
your promotional sales campaign against the total revenue you expect to receive.
Consider that many companies are spending up to 60 percent of advertising budgets on
sales promotions. Be sure that your promotional campaign is both cost-effective and
profitable.

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