If you’re a retail or service business struggling to turn a profit, perhaps it’s time to refocus certain practices in order to fully maximise how much you make.
Leveraging offers and promotions in an effective manner is a superb way of maximising profits. Whether an SME missed out on making a profit or failed to increase its revenue the year before, it can seriously benefit from repositioning its methods in order to reap the rewards from these targeted tactics.
Arguably one of the best ways to maximise profits is through the appropriate use of offers and promotions, regardless of your retail or service sector. Here, we’ll present a range of ways that SMEs can use offers and promotions to grow their profit margins.
The first – and perhaps most obvious – method is the use of sales and offers. But in the world of retail and service, there’s more to it than simply marking down items and hoping they’ll sell. Though it’s better to clear inventory rather than taking a loss, learning how to use sales effectively is an art unto itself. You have to decide which products are worth discounting, by how much, and for how long.
There are three especially popular means of pricing sale items which should be considered when slashing the costs of your stock or services. The first, markdowns, involves reducing prices across a selection of products that all your customers can then purchase. Usually, they’re backed up by ad campaigns, either through paid or unpaid channels
Loss leaders are another excellent method of promotional pricing, too. When you have a certain product that’s in demand, either luxury or everyday, heavily discounting these items can bring in new customers as a result. If you’re looking to maximise profit by increasing traffic to both store and site, generating brand awareness in the process, then loss leaders are well worth considering.
When you price your sale items, combining them with other items or offers such as the classic “buy one get one free” is a good way of generating a perceived higher value for a lower cost, so customers feel they’re getting more for their money.
Your existing customer base can afford you plenty of opportunities to maximise profit potential through the use of loyalty programmes. Customer retention is necessary for repeat sales; making them feel like their custom is valued goes a long way. By targeting offers to specific, loyal customers, they’ll feel appreciated while your business grows at the same time – and who doesn’t love a discount anyway?
Leverage your email marketing by contacting regular customers with sales, discounts and offers for limited periods of time, in a way that incentivises them to make further purchases. Customers like this are important to your business; get them to stay around longer by rewarding their loyalty, even if they’ve only recently used your business.
Give your customers reason to make more transactions by basing your discounts around specific events throughout the year. We don’t mean merely Christmas or Easter sales, which you’ll likely already be doing, but more ‘themed’ weeks which you can use to your advantage to capture your customers’ attention. If you’re a clothing business for example, perhaps you can take advantage of a spell of nice weather by marking down items. Or, maybe it’s the one-year anniversary of your website – why not offer a discount for that reason?
By creating a more consistent run of events and corresponding discounts, your audience will come to expect them, which could help drive traffic to your site and increase the possibility of further purchases.
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Buddying up with other businesses is a smart idea if you’re looking to maximise profits. Not only are you forging valuable relationships with similarly-minded businesses, it can help you to make increased sales, too. Used in conjunction with a sale or discount, the joint venture can be mutually beneficial since it increases the visibility of your own business and strengthens your relationship with other companies.
Whether it’s a guest blog post, free samples or exclusive offers for their own customers, joint ventures can be a bold, but hugely beneficial move.
If you have a physical store, then make sure you’re using your point-of-purchase displays in an optimal fashion, especially if you’re a retail business. Canny placement of your points of purchase, near to checkout points, for instance, can often lead to impulse purchases – making them an effective method of increasing sales and maximising profits.
There are various means of setting up your points-of-purchase displays. As customers reach the end of their shopping trip, draw their attention to anything they might have missed the first time around. By placing products near to the checkout, they might be tempted to make further purchases.
At the checkout itself, containers filled with discounted items are another great way of gaining further last-minute purchases. Additionally, offer out free samples if you can; it’s an excellent way to get customers into your store. Indeed, complimentary samples are not only a great way of illustrating your products and values, but give a memorable introduction to your business which could well transform into a purchase down the line.
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