Think before you SALE
At the time of writing this, many small business owners, particularly retailers, are struggling for sales or turnover. We are clearly going through a time where consumer confidence is quite low and this in turn is impacting negatively on business turnover. I think it’s fair to say that many operators, myself included, are caught up in the uncertainty of things at the moment and it’s difficult to know exactly what to do. Many businesses still have the expenses rolling in each week or month and with reduced sales or turnover, keeping cash flow under control can present a serious challenge.
When caught in a situation like this, generating cash can become a necessity and when this happens, businesses often resort to putting on a Sale of one sort or another. You only have to walk down a city main street or through a shopping centre to see that almost every shop has sale signs slashed across their windows.
Having a Sale is good, and not just at times when you need to generate some quick cash. For this item however, I want to concentrate on technique and suggest some strategies for those times when you may find yourself having to have a cash generating Sale. Using a Sale as a routine business builder we’ll discuss at another time.
By way of suggestion, let’s lay down some simple steps to follow –
Step 1 – Determine what outcome you’re trying to achieve.
Simple question I know but if your answer is simply to raise cash, I suggest you think that through a bit more. You need to also consider what other impacts the exercise may have on your business.
How much cash do I need to raise?
What method will I use to get the word out?
How much advertising or publicity will I have to do and how much is that likely to cost?
Are my expectations realistic?
If I achieve my goal, how will this affect my overall profitability and how is it likely to impact on my sales after the ‘Sale’.
Step 2 – Consider alternative ways of raising the necessary cash you need.
The most common method most businesses use is to offer a huge discount, often across the store or on all stock, and then advertise it heavily on one or more media. Decisions like this are often made in what can best be described as a state of panic.
This method may well raise the required cash but often it can prove to be very expensive and in some cases, there may be no profit at all or even an overall loss when the end result is known.
Before committing to a strategy like this, consider this….
How much time do you have to achieve your goal? If you have time to manoeuvre, use it.
How can I make less sales but bring in more money? Instead of offering 50% off, would buy one get one free be better?
Do I need to offer one flat rate discount across all items? Up to 50% off storewide sounds better than 25% off storewide and will not stop customers from coming in and looking. The varied discounts will also let you discount items appropriately and according to their likelihood of selling. If you offer one discount across all stock, you can bet your booty that customers will buy all the good and easily sellable stock first. Why give them 25% off prized merchandise when they’ll still buy at 15% off?
Step 3 – Consider the time frame.
Customers generally respond better if a measure of urgency is involved. Two or three Sales during a given period could generate a better result than say one month long sale.
On the matter of time frame, consider this….
Most Sale activity happens within the first couple of days of a Sale starting. People know that the early bird catches the worm. I suggest a 3 -4 day Sale is best with Thursday to Saturday or Sunday best. For a short Sale, you can also crunch your advertising into a shorter time frame which will either save you money or allow you to create more impact with bigger press ads or more frequent radio/TV ads.
Planning an immediate follow up Sale can also be a good strategy but if you do, you need to plan for it and book any advertising you need ready to go. Eg. Your Sale is on Thursday to Sunday but on Monday, you run ads that say something like “Due to the outstanding response to our Sale, we’ve extended it for 3 more days, you still have time to get up to 50% off etc.”
Running consecutive Sales each weekend over 3 – 4 weeks can also be a good strategy. You just need to come up with different themes for each Sale. Eg. Up to 50% off Winter Clearance Sale, followed by a Stock Reduction Sale, followed by a Manager’s Superseded Stock Sale, followed by an End of Season Sale. If you think that’s overkill, think again. Customers are very gullible as Harvey Norman proves week in week out. They Sales tripping over Sales very week.
Step 4 – Think about how to and where to advertise.
Simply throwing money at advertising may seem a good idea but in my experience, with a little thought or by being a bit smarter, you can often achieve a better result for less money or at the very least, get more bang for your buck overall.
A few thoughts to consider….
Your existing customers will in all likelihood represent your best market. Do whatever you can to let them know about any Sale you’re having.
Make sure that any ads you do have a strong and clear message, that they’ll quickly get the reader’s, listener’s or viewer’s attention and that they say something well worth seeing or hearing.
Step back and imagine yourself in the potential target market’s shoes and ask yourself, “would I respond to this?” If the answer is no, change it to what you would respond to.
When you place or buy ads, the trick is to reach as many people as you can for as little as you can but to do so without jeopardising the level of impact. Keep in mind, it’s the audience that you’re buying so always go for the best value for money when placing ads and not what at first glance, appears to be the cheapest price. (See more on this in The Price is not always right -Advertising Know How April 15th).
Always negotiate strongly with your media rep., you’ll be surprised how much they’ll discount their prices if you play extra hard ball with them. Keep in mind they’re just like you and me much of the time and are desperate for the business. Push real hard, you never know where it will get you.
Make sure you fully utilise your front windows, in store signage and any other opportunities to both catch people’s attention and show people who respond to your sale that something BIG is happening.
If you have Facebook, an email contact list or some other social media or network connection, make sure you use that too.
Step 5 – Make sure respondents have a great experience.
It may be a Sale event but it’s also a chance for you to win and keep new customers. Make sure that everyone who comes into your business during this Sale or at any time, leaves after having a great experience. The real value of your Sale may over time, prove to be in the new customers you introduce. Don’t blow it!
Need more advice?
Feel free to email me if you have any questions or would like some advice more related to your specific type of business. Use the contact or feedback tabs to email me.