What is a Sales Promotion? Tips and Examples to Close More Deals
Just about every company you’ve ever heard of has run a sales promotion. In this article, we’ll explain exactly what they are, their pros and cons, the different types of sales promotions (with examples!), and five strategies to ensure your promos are a practical part of your sales strategy.
By the end of this guide, you’ll be a sales promotion ninja—I guarantee it. Does that sound like a plan? Then, let’s get started.
What is a Sales Promotion?
A sales promotion , sometimes referred to as a “promo,” is a marketing strategy wherein businesses make special offers to generate interest in their products and/or services during a set period of time.
Have you ever been shopping at the supermarket and seen a sign above the ice cream that says, “Buy One, Get One Free” or “BOGO”? That’s a sales promotion.
You’ve probably scrolled through social media and noticed your favorite clothing retailer post something like, “Everything 50% Off – Today Only!” right? That’s a sales promotion. Have you seen a software company offer a 14-day free trial? Yup, that’s a sales promotion.
There are many different types of promotions, which we’ll talk about in a few minutes. All of them are designed to stir up interest, create a sense of urgency, and, most importantly, boost sales for the companies that run them.
The Pros and Cons of Sales Promotions
So, why should your company run sales promotions? Because there are a lot of benefits to doing so. There are a few drawbacks, too, however. Let’s talk about the pros and cons of sales promotions so that you can decide if they’re right for your small business.
The Pros of Sales Promotions
- New Leads: Sales promotions can be a great way to generate new leads. Think about it. You might not be willing to pay full price for a product you’ve never heard of—even if it seems amazing. But if you can try that product for free for 14 days or get it for 50 percent off, you’d probably jump at the chance, right? As soon as your customers accept your free trial or take advantage of your discount, you can sell to them again in the future.
- More Sales: It’s not just about leads. Sales promotions often result in more sales, too. Your company will almost always sell more products and/or services when they’re discounted. Why? Because humans love good deals! The science backs this up. In one study, folks who received a $10 voucher became 11% happier than those who didn’t. Want to delight your customers and drive more revenue? Run sales promotions.
- Minimize Risk: Planning to launch a new product in the near future? You’ll sell more with well-planned sales promotion activities, which will increase the likelihood of your new product’s success. Need to offload unsold products to make room for new shipments? Run a sales promotion and your overstock will disappear, helping you recoup the costs of inventory. In both cases, you’ll minimize risks to your business.
- Greater Loyalty: You’ve seen the stats before. It’s 5x more expensive to acquire new customers than retain existing ones. A five percent boost in customer retention can increase company profits by 25 percent to 95 percent. Sales promotions are known for boosting customer loyalty. By keeping existing customers engaged with a short-term offer, BOGO sale, or other promotion, you’ll keep them from patronizing your competitors.
- Customer Insights: Data is the lifeblood of modern business. With access to important metrics, you can make better decisions for your company and facilitate its growth. Different types of sales promotions will give you different data points, which you can use to improve products, optimize marketing campaigns, and adjust sales strategies. The result? Shorter sales cycles, happier customers, and more success.
The Cons of Sales Promotions
- Brand Devaluation: Unfortunately, sales promotions can devalue brands. If a clothing retailer, for example, discounts a specific brand, customers may think it’s because they can’t sell their stock. Regularly recurring sales can have a negative impact as well. Customers may begin to think that your products and/or services are low quality. Why else would they always sell for a reduced price? Speaking of pricing…
- Pricing Controversies: Think about your favorite snack. Maybe it’s a cookie from the local bakery or a bag of chips from Krogers. Whatever the case may be, let’s pretend you always buy it for $3. Now imagine walking into the store and realizing that your beloved treat now costs $5. You’d be disappointed, right? Maybe even angry. If your customers get used to lower prices, they won’t want to pay full retail. Ever.
10 Types of Sales Promotions + Examples
There are a ton of different sales promotions out there. I’m not going to cover all of them—mostly because neither of us has the time or attention span for that
Instead, I’m going to explain the ten most common types of promos used today. Then I’ll give you examples of sales promotion to show how it works in the real world.
So buckle up. We’re about to explore the wild world of sales promotions, from free samples to cashback rebate offers and everything in between. Let’s do this!
Flash Sales
A flash sale is a limited-time offer in which customers can receive extreme discounts if they purchase within a narrow, predefined time frame—the “50% Off, Today Only” type of deal.
Flash sales can be highly effective because they create a sense of urgency. Buyers know that they have to act now if they want to save money. This typically results in a flood of new sales. (Note: we’ll discuss urgency and how to create it in the next section.)
To succeed with flash sales, promote them ahead of time. Use social media, email marketing, in-store signage, etc., to let customers know about the upcoming promotion.
Sales Promotion Example:
Here’s a great example from nTask. On Cyber Monday, customers can save a whopping 40 percent on the company’s project management solution if they purchase an annual plan.
Free Trials
Free trials are uber-popular sales promotions, especially in SaaS circles.
Want to convince someone that your software is the best? Let them try it out for 7-14 days, risk-free. This will allow them to explore your app, test out features, and really make sure your offering has what it takes to become a staple in their company’s tech stack.
What if you don’t own a SaaS company? No worries, you can still use this sales promotion. Service businesses, for example, can work for clients on a trial basis. And retail businesses can offer free samples. (Perfume companies and Costco do this. All. The. Time.)
Sales Promotion Example:
Shameless plug alert! Yes, we offer a 14-day free trial here at Close. If you’re looking for a killer CRM for your sales team, look no further. Close has the tools you need to succeed. All you have to do is sign up and give it a whirl. I’m confident you’ll like the results you achieve.
BOGO Deals
“Buy One, Get One Free” offers, better known as BOGO deals, are exactly what they sound like: customers buy one product and get a second product for exactly $0.
These types of sales promotions are a fantastic way to boost brand awareness. How so? Customers often keep one product for themselves and give the second to a family member or friend. This will help you build your business via word-of-mouth. Win!
Again, traditional BOGO deals can be modified to fit different business needs. Software companies, for example, can increase customer retention by offering them a free month of service if they purchase the initial month of service themselves. Get creative with your offers.
Sales Promotion Example:
You thought one six-inch sub was good? No, you need two of them! This Subway sales promotion doubles the fun with a BOGO offer that’s hard to turn down.
Notice how Subway ran this sale on “World Sandwich Day,” which is, apparently, a thing. Weird holiday sales aside, anytime you can sync your promotions with a known event—Black Friday, Christmas, the Super Bowl, etc.—you’ll probably boost sales.
First-Purchase Discounts
These sales promotions are reserved for first-time buyers and help generate new customers.
Remember, the first sale is the hardest to make. Once you convince a prospect to buy once, it will be much easier to convince them to buy again. (Unless your product is terrible. If that’s the case, running a great sales promotion is the least of your worries. Fix your product first!)
The best thing about first-time discounts is that they only work once, so your company won’t lose much revenue. You’ll sacrifice profitability at first. But, if all goes to plan, you’ll make a lot more money in the future as customers purchase full-price goods.
(Note: You can combine first-purchase discount offers with some referral program, too. This will encourage existing customers to spread the word about your brand and new customers to make purchases and give your products and services a fair shake.)
Sales Promotion Example:
HelpCrunch, a customer communication app, crushes it with its first-purchase discount offer. During Black Friday, customers could use the code shown above to score 30 percent off their first purchase. This is an enticing offer for any entrepreneurial buyer.
Upsell Specials
Upsell specials, also known as tripwires, aren’t as popular as the other sales promotion techniques. But for the right company, they can do wonders for sales and revenue.
Here’s how the upsell special works: companies sell entry-level products to prospects. Once the customer accepts the offer and begins to trust the company, their sales team reaches out to the customer and encourages them to upgrade to a higher-priced option.
Sales Promotion Example:
Look at this upsell example from Grammarly.
A user decides to invest in the Grammarly service and purchases a subscription. The sales page then gives the user three payment options: month-to-month, quarterly, or annually. The longer the user signs up, the lower the monthly price becomes.
I want to point out a few things here. First, Grammarly encourages users to buy its annual subscription by labeling it the “best value.” The company also reminds users of all the benefits of Grammarly, including 250 premium checks and 24/7 customer support. Finally, the sales page includes a quote from a reputable source about how useful the service is.
Keep these things in mind when creating your own upsell offers.
Donations
Saving money is great, but that’s not the only thing customers care about.
Modern buyers also want to feel like they’re making a difference, which is why sales promotions that promise to donate a portion of proceeds to charitable causes are effective.
There’s another benefit to this kind of promo: it will boost your brand’s reputation in the marketplace. You won’t just be the company that sells XYZ; you’ll be the company that sells XYZ and supports the work of important charities around the world. That’s awesome.
Sales Promotion Example:
A few years ago, Necker’s Jewelers partnered with the March of Dimes organization to raise awareness and funds. This likely helped increase Necker’s Jewelers’ sales and the goodwill of its target audience, making for a successful campaign on all fronts.
To run a similarly successful campaign for your company, consider stating the percentage of proceeds you’ll donate to your chosen charity. Buyers always appreciate transparency.
Free Goodies (AKA Freebies!)
This consumer sales promotion is simple: customers get free items and services when they purchase other, typically more expensive, items and services.
(Note: sometimes customers must spend a certain amount of money, too.)
This promo is a great way to entice people to buy your stuff without lowering your prices. It basically lets you run sales promotions without devaluing your brand.
Sales Promotion Example:
High-end skincare brand Votary knows how to run an effective “free goodies” promo. Take a look at the example above. Customers can secure 25 percent off with the coupon code “BF25”. Or, they can secure 25 percent off and free brightening hyaluronic serum if they spend more than $216.
I won’t pretend to know what “brightening hyaluronic serum” is, but it’s free, so it must be amazing! When creating this campaign, make sure your customers want the goodies.
Free Shipping + Free Transfering
If you run an e-commerce store, a free shipping sales promotion might help you boost sales. After all, no one wants to pay shipping costs. In fact, research shows that 48 percent of adults in the U.S. abandon their shopping carts because of shipping and related fees.
Software companies, on the other hand, have a different problem. They don’t have to ship products. Instead, they have to convince customers to transfer services to their platform. Doing so is often tedious and labor-intensive, so some buyers never do it.
By offering a limited-time free shipping or free transfer offer, you can potentially convince more people to purchase your products and boost your revenue numbers.
Sales Promotion Example:
In this sales promotion example, HostGator entices potential buyers to use its web hosting service by offering free WordPress and cPanel website transfers to all new customers. Customers don’t even have to enter a special code; they automatically receive the perk upon purchase.
Product Bundles
Why buy three individual products for $30 when you can buy all of them together for $25? That’s the logic behind the product bundle sales promotion, and it really works.
This is a great promo to use when customers are interested in trying multiple items to see which they like best. So, food, clothing, beauty, and video game products all fit the bill. However, it can also work when attempting to win over a competitor’s customer base.
Sales Promotion Example:
Adobe is one of the most successful companies in the world. How did they get there? They created amazing products for creative professionals.
But that’s not all. They’ve also mastered the art of product bundling by allowing said creative professionals to purchase multiple apps—Photoshop, InDesign, Illustrator, etc.—together. This also helps Adobe create loyal customers who encourage their social circles to purchase.
Challenges + Competitions
Well, end with arguably the most fun sales promotion out there: challenges and competitions.
You see these on social media all the time. A company may offer discounts, free products, and other prizes to its followers if they participate in some way. Maybe followers have to post videos of themselves using the company’s goods. Or invite as many of their friends as possible to join the company’s email list. Or something else entirely.
This sales promotion is a fantastic way to engage a target audience while also scoring enormous amounts of free publicity. Honestly, there aren’t many downsides to this promo.
Sales Promotion Example:
Do you love Pepsi? Have you always wanted to visit the Big Apple? Then you’ll love this sales promotion, as well, I’m sure, many other people. In exchange for scanning the QR code in the ad, Pepsi fans can enter themselves into a giant raffle of sorts. The prize? Awesome New York experiences, like attending a Yankees game or a concert at Madison Square Garden.
Now, this particular promotion doesn’t ask participants actually to buy anything. So, if you’re looking to boost sales, make that a requirement for your promo.
5 Strategies to Create an Effective Sales Promotion Campaign
Here’s the bottom line: a creative promotion will help you boost sales. But you have to follow a few best practices to see success. Keep these five things in mind when planning your promo:
Know Your Audience
Don’t choose any old sales promotion idea; just run with it. Ask yourself, “Which promotion will my target audience connect with most?” Then, put that specific promo into practice.
To do this, you need to understand your audience. What do they like? What are their career and personal goals? What do they struggle with regularly? If you can’t answer these questions, you need to research your ideal customer before creating a new promotion.
Don’t worry—research isn’t that hard. Simply study your market, read reviews of your products, look at your competitors’ promotions, and definitely talk to your current customers. They will be a gold mine of information on this topic.
Build a Promotional Strategy
Now that you know which sales promotion you’ll run and the specific discounts, goodies, and prizes you’ll offer, you need to promote the beans out of it.
Post your promo on social media—multiple times, if possible. Email your list about it, too. I suggest partnering with other companies to get the word out as well.
If you want to go big, consider running PPC ads to spread the word about your sales promotion. This will get your offer in front of a ton of potential customers. Just make sure the potential rewards of a PPC campaign justify the costs. This won’t be the case with every promotion.
Create a Sense of Urgency
Why should potential customers participate in your sales promotion right now?
The best promos create a sense of urgency. There are a few different ways to do this. The easiest way is to put a time limit on your offer. Buyers can get free products, 50 percent off their next order, or whatever else… But they have to purchase within the next XX hours.
You can also create urgency by limiting participation: “We’re giving away free [insert product] to the next 100 people who purchase something from our online store.” Or, “Get 50 percent off [insert product]. But act fast. We only have 100 left in stock. Get them before they’re gone!”
Offer a Loyalty Program
You’ve decided which promo to run, promoted it via multiple channels, and started making sales. Great job! But your work isn’t done.
I suggest inviting new customers to join a loyalty program. That way, they can enjoy future promotions, and you can easily contact them again to help stimulate repeat purchases. Done right, it’s a win-win scenario for everyone involved.
Test, Adjust, Repeat
I will be honest: not every sales promotion will work for your company. You’re going to run a few promos that completely flop. It’s just a part of the game.
The key is to measure the results you achieve with each sales promotion, then make necessary adjustments and try again. Eventually, you’ll learn which promos your target audience connects with and how to run them most effectively.
Bonus Tip: Don’t Make the Deal Too Good!
What would happen if you ran a 90 percent off sales promotion?
You’d probably make a lot of sales, lose a ton of money, and generate many low-quality customers who never buy from you again. Then you’ll wonder why every other brand succeeds with promos, but you can’t get it right. That’s not what you want.
When running your sales promotion strategies, focus on the quality of your customers, not just their quantity. Make sure your deal is aimed at your target market and entices them to make a purchase, but it isn’t so amazing that bad-fit buyers clog up your pipeline.
Build a Winning Promotion Campaign
The right sales promotion will increase leads, boost sales, and generate more loyal customers for your company—if you run them the right way, of course.
After reading this article, you have all the information you need to generate amazing promos that connect with your target audience and propel your brand forward.
If you’re seeking guidance on gracefully declining customer discount requests, our article, “How to Say No to a Customer Asking for a Discount,” offers valuable tips and techniques.
Do you know what else will help you create rock-solid promotions? A stellar CRM software.
The right CRM will help you learn about your target audience and your company’s financial standing. Armed with these details, you can choose, plan, and execute more effective promos. Try Close CRM today to see if it’s the right tool for your business.