The Q4 sales period has begun, and after another difficult year, many businesses are hoping that fortunes will change and deliver a much-needed boost to profitability.
Profitability is the key word. Brands are quick to talk about revenue, which is important, but revenue without profit is damaging, especially as insolvencies are on the rise in Australia.
So how can you navigate the sales period to protect profit and build customer relationships? It’s a balancing act, but possible if you’re clever with how you approach it.
Here are three tactics.
Be dynamic with discounting
It’s no good offering the same discount to every customer. If you do, you’re leaving money on the table as you’ll be offering discounts to some customers who may be happy to pay full price.
Instead, find a segment of customers who are on the fringes of becoming regulars, and offer them ‘dynamic’ discount codes – i.e. unique one-off codes that only they can use (and only use once). Outdoor equipment brand Alton Goods has used dynamic discounting to great effect – the company started testing dynamic codes and quickly saw a boost in its average order value compared to what it used to see with static codes.
Dynamic discount codes also work well with time-sensitive deals, especially if you push them out to select customers over SMS. Culture Kings saw 338% year-on-year growth in its global SMS click rate by using SMS for time-sensitive sales and limited-time offers, indicating customers are often on the lookout for flash sales alerts and last-chance offers.
Tailor marketing to high-value customers
Your most profitable customers are often your most loyal ones, so consider other ways to engage them this sales period outside of discounting. That can include targeting them with complementary products to what they’ve previously purchased from you.
Luggage brand July is just one example of a brand that has engaged high-value customers to great effect. Last year, July created a segment of customers who had, within the last 90 days, visited the landing pages of products similar to its newly launched limited-edition pink luggage line. July then targeted an email campaign to just this segment, which resulted in a complete sell out, contributing to double-digit year over-year growth in revenue.
Bundle complementary products
Consumers like feeling they’re getting a good deal and value for money. So instead of offering discounts on individual products, consider bundling complementary products into a single deal, especially products you’re currently overstocked on or filling up too much shelf or warehouse space. Bundling often leads to a higher average order value and long-term value as you sell multiple products that reduce inventory, distribution and marketing costs.
Aussie natural health brand Happy Way has used bundling to great effect in the past during sales periods. By segmenting based on preferred channels and dietary preferences, Happy Way was able to tailor messages last Black Friday across email and SMS to deliver more relevant offers, bundles, and product recommendations. As a result, the brand saw a $350,000 boost to revenue.
Discounting doesn’t buy you loyalty, but when you’re clever about how you go about it and who you offer it to, you can shift the right kind of inventory, deepen relationships with existing customers and attract new ones. Most importantly, you can protect the most critical thing to your business – profit.
