6 proven promotional strategies to grow ANY business

Do you struggle to build effective promotions? Well, if so, I'm going to show you in this video, six tried and tested strategies to help. Now, if you've not met me before, I'd like to say hello. My name is Paul. I'm an accountant. I'm CFO, I'm an entrepreneur, and I've got over 25 years of experience in helping businesses to grow profitably.

Now, if that sounds interesting, please subscribe to my channel. You’ll find the link below. I post new content every week and I'd love to be able to share it with you. Okay, so let's get back to building effective promotions, something I'm asked about time and time again, because the reality is, in my experience, most businesses adopt a scattergun approach to promotions. They'll come up with promotions which may or may not drive sales, but often they don't drive profit. At the end of the day, profit and cash in the bank is what it's all about. 

The strategies I'm going to talk through apply whether you're selling either goods and products or services. So it's relevant for pretty much any kind of business. Before we dive into the tips, there's two pieces of information that you need to work out upfront, because if you don't, you're going to struggle from the offset.

The first is you need to understand what I call your starting profit margin. And what I mean by that is do you know how much profit you're making from selling your goods and services at the moment? That's really the starting point. You need to know that at least on an overall level for your business or, even better if you know it by unit.

So if you look at a particular period, look at how much profit you've made in total for that month, for that period and then divide by the number of units you've sold, that gives you your profit per unit and that’s really your starting point because that's going to help you understand how much money you can afford to give off and still make money.

The second thing that you need to know is what's the objective of your promotion? Now I know what you're thinking. Isn't that obvious? I'm running a promotion to make more money. Well, maybe, but that's not always the case. These are some examples. You might be running a promotion because you want to build your customer base and get a load of new customers, in which case you might decide that you're prepared to make less money on a first purchase because you know they're going to come back and buy again. 

Or it could be that you do want to generate some sales and some more profits (which is why most people run promotions). It could be you're trying to drum up business at a quiet time of year, if your business is seasonal. It could be the kind of promotion where you're trying to drive repeat business, in which case you might want to run a special deal just for your existing customers, which they will love because they'll feel more special. And actually the mechanics of that promotion might then be different. It could be you're running a promotion to drive up spend, i.e. when people are buying something, how can you get them to spend a little bit more? That’s why the supermarkets put the Mars bars right by the checkouts - It's another very good way of driving profit.

It could be that you've got a load of stock (aka inventory) in a warehouse or back room that you just want to get rid of because you've got money tied up in it and you need to release that money, in which case that promotion can look very different as to whether you're just trying to do something else to to build profit.

So as you can see, there's quite a few different reasons why you might want to run a promotion. And actually you need to understand your objective, because the type of promotion you build will be very different depending on what you're trying to achieve. Okay, so that's the two things you need to know upfront. Your starting profit margin and the objective of your promotion.

And before we go any further, I want to throw it back to you. Do you know how much profit you're currently making in your business? I'd really love to know. And if you don't, by the way, don't feel bad, because most businesses I speak to, particularly startup businesses, really don't have a handle on this. So it's no problem if you don't. But it's something that you need to start thinking about. 

Okay, so here’s tip number one. To build an effective promotion, it needs to be a win-win. What do I mean by that? What I mean is it needs to appeal to your customers and be seen as a win in their eyes, but it also needs to work for you and deliver your objective.  So, for example, I'm sure you've all seen examples of what I call dud promotions. One of my favorite dud promotions is when you go into a shop and they give you a card that says if you buy ten things from me, whether it's cups of coffee or whatever else, I'll give you one free.

So what that’s really saying is I have to come in ten times and buy 10 things and then you'll give me just under 10% off? So that sort of promo  works for the business in the sense that they’re not giving much money away and  they're still making a profit. But from a customer point of view, that's a pretty poor deal in my opinion. 

At the other extreme, it could be that you're giving 40% off everything you sell. From a customer's perspective - that's incredible. But I'd be really surprised if any business is making money, giving that amount of money away on everything. So that's what I mean about striking the right balance, having a win-win for both you and your customer. The promotion has to be attractive enough to make your customer buy stuff from you, but it also has to work for you. 

And when we talk about value for a minute, in the customer's eyes here, value doesn't necessarily mean money. What we're talking about actually is perceived value. So what do I mean by that? Well, you might, for example, give something away free that you might cost, you know, a couple of dollars. But in the customer's eyes, that might seem like it’s worth a lot more money. We all know the likes of perfume and cosmetic brands that give a free gift with purchase and, actually, you can bet the cost of that gift is very low. But from a customer perspective, it's very high.

So when you're thinking about a win-win situation, think not just about what you're giving away in sales, in absolute monetary value. But think about giving the customer the best perceived value as an offer as those two things aren't necessarily the same. 

So that's point number one. Point number two, to build an effective promotion, whatever you do, avoid shop-wide sitewide promotions such as 20% off everything, 30% off everything. Those kinds of promotions are not smart and they will absolutely kill your profits. It's really interesting because I am sure we've all seen these kinds of promotions. They are relatively common. I'm not saying don't give money off, but I am saying is that you shouldn't give money off everything, instead, do it on a specific range or product. That way you're limiting the impact to your profit. And actually the chances are you'll get someone to buy something on a promotion but then they may well buy something that's full priced as well. 

In fact, the only time I’d probably say you want to do a site-wide or store-wide promotion is if your business is going out of business and you just need to liquidate all of the stock, which is a situation that none of us want to be in.

So that's step number two. Step number three. When you run a promotion you’re actually training your customers. They'll learn how often you go on promotion and how often you give money off. Now that can work to your advantage or it could work to your disadvantage. If you're the kind of brand that routinely has 20% off every month, then you decide to go off sale for a month you’ll find customers won't buy from you because they'll know there's another promotion coming down the line. A good example for this many furniture retailers. They always run sales (giving huge amounts of money off by the way, which means they’ve just artificially jacked up the price to start with). Let's be honest about what is happening here. They’ve trained their customers to think, “I'm not going to buy anything unless it's on sale because they'll always be a sale”.

Think about the frequency of your promotions and also think about seasonality and using promotions to complement that. For most businesses, whatever line of work you're in, there will be times in the year where people are more in the market to buy your goods and services and times when that when they're not. If you’re selling gifts to customers, the run up to Christmas and Thanksgiving and the holidays is when people are in the market to buy.

Therefore, the kind of promotions that you need to run will typically mean you'll need to give less away than you might do in midsummer when nobody's shopping.

That brings us to point number four: A percentage discount percentage off is not always best. I know those types of promotion are common but actually what resonates very strongly with customers instead is hard cash off. So instead of giving 20% off, if you can give $10 off or $20, you might find you’re giving away less than a percentage, but in the customer's eyes, people can much more easily get their heads around real cash so these types of promotions typically do very well. 

The other thing that really works is the magic word ‘free’. I don't mean you give the products away for free, but think again about the cosmetic companies. Those ‘free’ gifts are a really powerful offer. One of my previous clients was a quite well-known slipper company and they didn't want to give money off at Black Friday because they didn't want to be discounting. So instead they gave away a free pair of quite snazzy socks with their slippers. The price of the socks was, frankly, peanuts compared to giving money off of what were quite expensive slippers, but that promotion really flew because of the word free. So think a bit out of the box in terms of the kind of promotions you're running because a percentage off isn't always the best way to go.

Right. Tip number five - To make your offers the most attractive, you need to make them time-bound. So what I mean by that is that they need to be limited in some way. Run them for this weekend only, or next week only, or only give the offer to the first 100 customers, etc.

Any time you limit an offer, it has a natural effect of boosting people's likelihood to take up that offer. Otherwise, they just think, oh, it sounds quite interesting, but maybe I'll wait. If you're sending out an email, put a countdown clock within that email. The take-up of those offers will be much higher because it spurs people into action.  

Finally, the sixth point might sound dull, but to me this is the key to everything. You need to monitor your promotions as they run, monitor the uptake of them and adjust them accordingly. Don't just think I'm going to give money off for the next two weeks and then at the end of the promotion look back and think, Oh, that didn't work very well. Be on it the whole time. Look at how much you’re selling and how much money it’s making and if it's not working, shake it up a bit, eg. give an extra five $5 off or put another item into the promotion or try something else. Most people think that designing a promotion and getting the materials printed or designed on the site is all you need to do. But actually when the promo starts, so does the hard work. And once it's done, sit down and think, ‘How did that work? Did that work for me or not?’ That way you're capturing those learnings and you'll be able to build on them. 

So there we are. Six tried and tested steps that will help you build killer promotions. I hope you found that helpful. There was a fair bit of detail there so to make things easy for you, I've got a free fact sheet which summarizes the points we've talked about, so if that's helpful, feel free to download that and think about how you can start applying those to your own business.

And also before I go, I also have another free factsheet, which I’d really like you to download, and it's all about turbocharging your cash flow in your business and doing so without selling a penny more.

So if that's interesting as well, click the link below and download it. And if you've not done so as yet, as I mentioned earlier, please subscribe because I'm posting new content every week and I'd love to be able to share that with you. Well, thanks very much for listening. I appreciate your time and I look forward to seeing you in the next video.