The Cost of Holiday Sales to Your Bottomline

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When it comes to this season of giving, sales promotions bring on holiday cheer. To make this time of the year extra merry, brands and businesses give their customers the gift of bundles, giveaways, special gifts with purchases, and all kinds of holiday promotions.

As online shoppers are scrambling for gifts for both themselves and their loved ones, they are faced with hundreds and thousands of sales promotions each day. From being targeted by Instagram and Tiktok ads on their feeds to receiving exclusive email send-outs, online shoppers are spoiled with choices on what and where to shop.

But from the perspective of business owners, it’s important to consider: are holiday promotions actually worth it? Isn’t the natural demand of the holiday season enough? Or should businesses actually take advantage and ramp up prices?

In this article, we list down the advantages and disadvantages of having sales promotions this holiday season:

Advantages

  • Attract new customers – Incentivize more online shoppers to start shopping from your brand with discounts, sales, and markdowns that they will not be able to say no to. This is also the perfect opportunity to draw in customers who may be familiar with your brand but have been hesitant to checkout.
  • Upsell bundles and products – By using sales tactics like including gifts with purchases for a minimum order requirement, you can upsell products or bundles to help you meet your sales goals at the end of the quarter. Entice your customers to shop more by giving them more bang for their buck.
  • Offload inventory – Do you have an aging inventory you are looking to get rid of? Use holiday promotions to offload any products you want to phase out (for whatever reason whether it’s poor sales performance, a downward trend, or seasonality).
  • Increase long-term loyalty – Sales promotions help you strengthen your relationship with your customer by keeping them engaged with your brand. During promotional periods, shoppers tend to purchase (or even hoard!) more of your products that they already love or be motivated to try new products from your brand.

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Disadvantages

  • Increased price sensitivity – Incentivize more online shoppers to start shopping from your brand with discounts, sales, and markdowns that they will not be able to say no to. This is also the perfect opportunity to draw in customers who may be familiar with your brand but have been hesitant to checkout.
  • Quality image dilution – If your brand rarely runs discounts or price markdowns, promotions could potentially dilute the brand’s image in terms of quality. Consumers may suspect that the products on promotion are not selling well for a reason and may be hesitant to purchase.
  • “Sales promotion trap” – For businesses, there runs the risk of falling into this trap where discounting and promotions may be the only way to reliably get customers to check out or purchase your products. 

To sum it up, sales promotions during the holiday season hold various advantages and disadvantages to your bottom line. But what’s important to remember is that it all depends on your strategy and the execution of your campaign. Effective campaigns are founded on strategic decisions with accurate data and analysis surrounding your customer needs and shopping behaviors. 

So, what should you and your business remember to ensure your sales promotions this holiday season will be a success? There are four key tips to remember:

Build a sales promotion around your customers

You have to have a clear, in-depth, and accurate understanding of your customers and their shopping behaviors and habits toward your brand. What are the best-selling items? What kind of feedback has your business received?

Engage in a conversation with your customers and do a deep dive into what they hope to get from your brand. Perhaps there are two products they often purchase together and you can create a special holiday bundle to boost sales. Or study what products they would have more of a tendency to purchase in bulk if it goes on sale.

It’s crucial to tailor your offerings to who you’re selling them to. Make sure that you do your customer research and use your data and analysis to design a sales promotion that they won’t be able to say ‘no’ to.

Offer something valuable to your customer

Don’t just base your sales promotions on the aging inventory you want to offload from your warehouse. Otherwise, you will lose sight of your customer’s perspectives, needs, and wants. When a brand falls into this trap, they risk its image and develop a bad reputation among new and existing customers.

Create a promotion that includes something you are certain will be of value to your customer. Start with your core business offering and your best-sellers – what keeps your customers engaged with your brand?

Use the right messaging and the right platform

What you say and how you say it plays key roles in your promotions. Position your sales campaign in a way that still feels exclusive and special to your customers, rather than just a plain and straightforward price reduction or markdown period.

In addition, also delve deep into your data on where your audience would be most susceptible to engage with your message and campaign. Analyze your buyer behavior by looking at data focused on email opens, social media engagement, website analytics, conversion rates, and general reaction and response to sales tactics,

List down clear goals and KPIs to measure success

In order to know if you were successful with your campaign is if they support a specific and measurable goal. Sales promotions require investment in terms of time, labor, and money so it is extremely important to determine if it brings you a net positive in the end.

For businesses, these goals could look like:

  • Increase sales and revenue
  • Boost brand awareness
  • Boost average cart order
  • Increase customer retention rate
  • Grow customer base

Additionally, goals will dictate the deliverables and actions of your campaign. For example, if the objective of your sales campaign is to increase sales and return on investment, you would potentially be measuring the success of your campaign through average cart orders during this period and customer acquisition rate.

When executed and done right, sales promotion could positively impact the bottom line during the holiday season. Promotional campaigns support several goals – from sales and brand awareness to lead generation and customer loyalty. 

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