3 quick fixes for improving promo R.O.I.

The biggest obstacle to improving the ROI on promotional investments is an organisation’s inertia. There is often a habit of repeating what was done the years before, plus or minus a few changes. As more companies realise that promotions are inevitable but by no means a long-term growth solution, improving the R.O.I. becomes the main focus.

Here are three ways to achieve quick ROI improvement.

1.      Focus on elastic segments only
There is no reason to support every part of your portfolio with promotions. Some brands, packs or segments may not respond well to promotions anyhow and other means of marketing should be considered. And keeping slow movers listed thanks to promotions is not sustainable and will likely be a very bad use of company resources.  

2.      Reduce subsidisation
The biggest cost of promoting is putting discounts in the hands of your loyal shoppers. Accuris UK research shows that more than a third of promotional sales go to shoppers who were planning to buy your product and pay full price. All too often shoppers are rewarded for just buying one product. Stop using single unit mechanics across all your packs and focus on mechanics that encourage shoppers to increase the spend in return for a discount.

3.      Be aware of the margin mix
It is astonishing how often we at Accuris come across promo plans that are not at all taking into the profit margins of products into account. Offering a 30% discount on a product with a 25% margin obviously means that losses increase the more you sell on promotion. It’s our 3rd quick fix.

36 out of every 100 pounds sold on promotion are subsidised sales to shoppers who would have paid full price but are getting a discount (Source: Accuris UK Benchmark 2017)