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”:
- Add a special offer for new registrants in the opt-in email confirmation. This could be a promotion contained within the email, a link to a special landing page, or a coupon for future use.
- Add a related up- or cross-sell offer to order confirmation emails. As with the above example, these promotions can assume different formats. Research shows customers look for and open order confirmations.
- Add special promotions to customer service emails. The aim is to thank customers for communicating with you while giving them another reason to purchase from your firm.
- Put a special link at the bottom of all your employees’ outgoing email. Route this traffic to a special landing page where your firm offers specially priced merchandise, such as overstocked items and remainders. An alternative is to allow employees to send special offers to their friends and family lists. Make recipients feel special about getting this offer. As the link may be forwarded to others in a viral manner, make sure it’s one that can be used by a wide audience.
- If your firm is part of a large corporation, consider offers that can be made on a sister firm’s Internet and Intranet sites or in their emails. These should benefit their customers and employees without detracting from the sister firm’s offering.
- Promote special offers to your own employees through your Intranet or internal email list. Many companies already offer staff and their families special rates on certain products. Employees are like customers and need to be continually reminded. Why not use a consumer-oriented promotion for employees when you promote to your customer base? Employees are consumers too!
- If your company receives a lot of resumes via email, create an auto-responder to market your services. It could be a specially priced offer, or a link to branded information that your customers find useful. A travel site could send discount offers, provide driving instructions or a flight-tracking link. Even if no products are sold, it drives traffic to your site and creates impressions that reinforce your branding and advertising.
- Send job candidates a special offer in the body of follow-up emails. This helps mitigate potentially bad news, and keeps prospects positive about your company. One online merchandiser offered candidates a 10 percent discount promotion to thank them for their time.
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:
a) Use the average response rate for your products. If available, use the response rate for a similar product or offer. Be conservative and take a quarter of that rate, as these are additional promotions.
b) Estimate the number of emails or impressions for the promotion.
c) To determine the number of buyers, multiply the response rate by the forecast promotion quantity.
d) Assume an average purchase value. It should be lower than your regular purchase value as this product is an addition.
e) Combine as follows: Projected Revenue = Response x Promotion Quantity x Average Purchase Value.
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.
Response = 0.8 percent x 0.25 = 0.002 or 0.2 percent.
E-mail Confirmations = 100,000/month or 1,200,000/year.
Projected Orders = 0.002 x 1,200,000 = 2,400.
Projected Revenue = $25.00 x 2,400 = $60,000.
To project margin:
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.)
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 to 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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