Leverage your existing promotions for additional value -- at little to no cost.
As a marketer, it's always good to have some quick hit ideas up your sleeve for that inevitable management request for fast, low cost promotions to meet year-end forecasts.
Eight tried-and-true ideas that yield incremental "found money."
Calculate the Value
To project the value of "found money" promotions, use a simplified set of calculations. Here's how to go about it.
To project revenues:
Assume a special offer is added to each email order confirmation. If the current response rate is 0.8 percent and you receive 100,000 orders per month for an additional $25 product:
Since "found money" promotions are incremental, they essentially have no marketing cost. As such, they must only cover their variable costs. You therefore need to know the contribution margin percent (i.e. how much money is left after all the variable costs.)
To project margin, combine as follows: contribution margin = projected revenues x contribution margin percent. Assume the product has a 55 percent contribution margin:Projected contribution = $60,000 x 0.55 = $33,000
Using this method, any promotion with a positive result makes sense to execute as long as it doesn't take a lot of human effort, which could be spent on more profitable promotions. Since some quantities may be small, try to use the same promotional work across several initiatives.
When setting up these promotions, remember responses can be coded so you can measure promotional effectiveness. Balance the value of the information you'll collect relative with the cost and time required to collect it. And, of course, continued use of the same offer results in promotion fatigue. Response decreases with use unless you regularly freshen the offer.
Where else can you find ideas for found money promotions? Examine the potential at each customer contact point. The aim is to add positive communications that build your brand and increase profitable revenues without detracting from future sales.
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Heidi Cohen is the President of Riverside Marketing Strategies, an interactive marketing consultancy. She has over 20 years' experience helping clients increase profitability by developing innovative marketing programs to acquire and retain customers based on solid analytics. Clients include New York Times Digital, AccuWeather.com, CheapTickets, and the UJA. Additionally, Riverside Marketing Strategies has worked with numerous other online content/media companies and e-tailers.
Prior to starting Riverside Marketing Strategies, Heidi held a number of senior-level marketing positions at The Economist, the Bookspan/Doubleday Direct division of Bertelsmann, and Citibank.
Heidi is also a popular speaker on current industry topics.
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August 21, 2014