Strategy What You Need to Know About Promotional Offers
1. Know why you're making the offer; that is, use the promo strategically.
2. Prepare a pro-forma; do your financial analysis.
3. Test the offer against another one.
4. Don't over-test offers within a drop.
5. Don't make the offer during your peak selling season, unless it's absolutely necessary,
6. Don't overuse an offer; re-test against a control or another offer.
7. Know what your competition is doing. You might have to use offers just to stay competitive.
8. Make sure your sample size gives you statistically valid results.
9. Expect some decline in the offer's impact over the control if the offer is repeated.
10. Read the results, and act on what you see.
Some catalogers resisted the temptation to make any offers this past holiday season, and they had great results. Many customers will order regardless of a promo, so you're giving away free shipping or discounting when you don't need to (this gets back to the point of having an objective for every promotional offer you make). Have a purpose in mind (e.g., to reactivate previous customers), and test each and every offer.
Stephen R. Lett is president of Lett Direct, a catalog consulting firm specializing in circulation planning, forecasting and analysis. He can be reached at (302) 537-0375 or via his Web site: www.lettdirect.com.