Today’s topic is promotions, the benefits and the pitfalls to avoid. I’ll focus on the issues plaguing brands in the beginning and follow up with the strategies brands can use to maximize their promotional effectiveness which translates to more loyal raving brand evangelists buying your products.
Promotions are the fuel for your brand. When managed correctly they are rocket fuel propelling your brand into the hands of consumers looking for the unique solutions your brand promises. When done wrong, they are the exact opposite.
Here’s a scary statistic you need to be aware of. 70-90% of all promotional spending is wasted. Let me repeat that, 70-90% of all promotional spending is wasted.
I’ve seen multiple studies on this over my career the reinforce this. So what does this mean and how does it impact you.
First some terminology. Trade spending. Trade spending includes all of the costs associated with getting your product into the hands of shoppers. It includes all promotional fees, slotting, advertising, product demos, and samples, etc. Trade spending is typically the single largest line item on any brands income statement. This is why this topic is so very important. This is also why this topic is complicated. It’s like juggling, there are many different balls in the air at all times. It’s no wonder there is so much inefficiency when it comes to trade spending.
The goal of every promotion is to introduce your product to new consumers – period. New customer acquisition is the lifeblood of every brand.
You’ve probably heard the term repeatedly discussed with your potential investors and on shows like Shark Tank. Customer acquisition is one of the key metrics that every company should be focused on. Includes building awareness for your product online through social media and advertising and on retailers shelves. It also includes promotions at retail like temporary price reductions, incremental merchandising, retailer advertising, product demos, etc.