It’s that time of year…
Maybe it should be called Sales Season.
Want to know how to make sales work for you – and have more cash coming in right now without hurting your year-round profits?
There are four important tips, and each one will make a difference to whether your sales bring in a much-welcomed cash boost or tank your margins until the end of time.
Watch this short video, and be sure to post your comments below when you’re done. Tell me what you need to know and what you think…
Today I’m talking about how to have a sale. It’s on my mind because it’s sales season. Black Friday… Cyber Monday… This is the time of year when all retail businesses, marginal ones, finally make a profit.
Now everybody knows I’m the “higher prices” guy. You know… Higher prices leads to higher margins, which leads to stronger profits, and gives you more money if you use marketing and sales. It’s a virtuous circle. Stronger demonstrable value always, always is the most profitable strategy over the long haul.
But as we know people sometimes need incentives to take action. Time has to be compressed. Sometimes the pressure has to be turned up. Which brings us to The Sale.
Sales are not the only way, but they are a good way to get people to take action.
Sometimes you just have to stimulate some business, you just need to bring in cash right away. Used strategically, sales are not a bad thing. They ARE a bad thing to rely on for your whole business but strategically they’re not bad.
Here are some tips if you’re going to have a sale.
First, you can’t always be running a sale. I’m thinking of Banana Republic. I signed up for their buyer’s club account. And they’re always running a sale. Almost every other day I get some sort of a discount coupon from them. It does drive purchases, it does act as an incentive. But it absolutely hurts margins.
Next, have to offer a reason for the sale. You don’t want people to expect your sale and you don’t want them to think you’re going to do it all the time. Tell people why you’re making this particular sale. It could be a tax sale, maybe it’s a divorce sale, perhaps it’s an inventory sale. It might be your office burned down – a real fire sale or a flood sale. It could be a “you want to expand your business” sale. It could be “I’m an idiot and I just can’t stop myself and we’re going to have a sale”.
You have to offer something as a reason for the sale so that your customers don’t take it for granted that the sale prices are going to be the “new” prices.
Next, don’t have the sale at an expected time. In other words, Black Friday – while it does work to put companies in the black – doesn’t work because in fact Black Friday crushes all the sales for all of the time before, and some of the time after.
So don’t do your sale when people expect you to have a sale.
See, people will compress all their holiday shopping, they’ll compress it to one day. On Saturday right after Black Friday I was in the stores and while they weren’t empty, they really weren’t full. You know what I did on Black Friday? I bought my daughter a new computer. Why did I do it on Black Friday? I got a pretty good discount that I know I was going to get. If people expect your sale, they’re going to wait for it. If it’s the same time every year, they’re going to wait for it. No matter what, don’t always do it at the same time.
Next, have a defined, limited amount of time and stick to it.
If you say it’s going to be a 3-day sale, it’s a 3-day sale. Prices go back up afterwards. Banana Republic had a Black Friday sale, but – as you expect now that I keep mentioning them – prices stayed at the BF level.
Next, make your sales irregular in length. Don’t let people know how long your sales always going to be so that they can wait until the end.
Last – It doesn’t always have to be the same kind of deal. You don’t have to cut price. You can cut price but you can also do things like a 2-for-1 or a 3-for-2. You can bundle services with a product or vice-versa. You can throw in the upsells, you can add premium value, you can even offer special things that people can’t get any other time. A limited time offer or a one time offer, in other words you can’t get this any other time so you better buy it now during the sale or promotional period.
All of these approaches give your customer more value and your average revenue per transaction where you’d like it to be.
I’m just going to recap to rules for having a profitable sale:
- Have a reason, a justification.
- Do it randomly in terms of time.
- Make it for a defined period of time
- Use other strategies besides cutting price.
This is Paul Lemberg and if you think it’s time to just bump up some business a little bit before the end of the year, go on have sale. To your outrageous success…