How to Measure the Effectiveness of Your Sales Promotions

Buy one, get one free! These promotions might be easy to create, but how do you ensure they are working?

Sales promotions are one of the most effective marketing tools out there. Any business can benefit from adopting promotional techniques such as coupons, sampling, temporary price reductions, print media, targeted items for targeted people, features, and more. While these techniques can attract people and increase your business's engagement rate, some of these promotions might not be as profitable or effective as you think.

Thus, measuring the effectiveness of your promotions is essential to understand what is and isn't working. Sales promotion effectiveness helps companies fully understand how their promotions and customers work, and when done correctly. It helps to make sense of every piece of data, analyze and strategize your next steps more effectively, and establish more effective communication methods.

Here are some ways of evaluating and measuring the effectiveness of your sales promotions:

1. Measure and analyze promotional campaigns - Once your campaigns are up and running, you need to set them up properly to see how they perform. Organize and analyze your data from all the different channels used, sales volume, cost of promos, profits, and ROI in depth. Spreadsheets can come in handy to correctly record your findings.

   
   

   Some of the formulas you can use to calculate your sales effectiveness include:

   1. Actual Sales - Baseline Sales = Sales Lift

   2. Total Volume - Base Volume = Incremental Volume.

      
      

2. Compare past and current promos - Examining past promos can help you analyze future ones, including success factors and mistakes. Past data can serve as a comparison factor and a valuable way to identify the best data source. In addition, comparing the results can help you determine the best trends and those that need a complete overhaul to become more effective.

   
   

3. KPIs and ROIs - According to Business Review," The next step is determining the primary metrics for measuring trade promotion effectiveness. Metrics such as sales volume, profits, sales lift, halo, pull-forward, cannibalization, and ROI require tracking. No single metric can provide a clear indication of a promotion's performance, and businesses must utilize a combination of key performance indicators (KPIs). Tracking the right metrics can identify what is effective and analyze customer satisfaction, engagement, and loyalty value of customers.

   
   

4. Track competitor & consumer behaviors - Tracking and predicting competitor and client behavior can help you plan great promotions. Knowing your competitors and how they run their promotions can help you counter-promote something better without losing out. This can help you determine what units you might need in stock. Some brands even create a promotional and markdown calendar up to six months in advance. Aside from competitors, track what your customers are like and what they like. What type of promotion is your data showing to be proven successful to them? Evaluating the effectiveness of your business's sales promotions on your own can be overwhelming and laborious. The best approach is to learn how to track and implement the most effective sales strategies using AI tools and the expertise of a sales and analytics advisor. Data management and AI tools can help your business succeed in your promotional campaigns and garner the most profit.

Marketing analytics helps us understand how everything interacts to inform decisions about how your company may want to invest moving forward. Re-prioritizing how your team spends its time and the resources, channels, and efforts you invest in are critical steps to achieving marketing success and improving sales. At DuartePino, our analytics experts analyze your business's data to evaluate the performance of your marketing, content, and products, and use these insights to reach the right people. Contact us to learn what our trust advisors can do for you.