Winner or Loser?
How to evaluate the success of a promotion
"The best laid schemes of mice and men go oft awry," and so do many promotions. If it did go awry, was it the fault of the person who planned it? The individual responsible for its execution? Someone else? Certainly it wasn’t the consumer who found it not worthy.
The purpose of this article is not to provide a road map for determining blame but to ensure none is needed. To do that, I will ask a lot of questions. Let’s hope your promotion process has the answers.
Let’s start at the beginning. Someone (to keep it simple, let’s say marketing) decides to develop a promotion to do something. There are many types of promotions, but they generally fall into one of three types:
- Provide information on a product
- Differentiate a product from its competitors
- Increase demand
Before we can determine if a promotion has failed (or succeeded), we have to know its purpose. It did have a purpose, didn’t it? Not sure? Ah, then we aren’t in a position to judge its success or failure. This article will focus on the third category, broadly referred to as sales promotions, designed to do one or more of the following:
- Increase sales
- Increase store traffic
- Generate more gross profit
To paraphrase a “Seinfeld” episode, is it “promotion-worthy”? Do you have specific criteria on which to judge if it is? Do you formally forecast the promotion’s effect on each, or any, of the three criteria above? Do you have hurdle rates that must be surpassed before something qualifies to be promoted at your locations?
If not, how do you determine what items merit being promoted? Do you simply decide we have X number of foodservice, Y number of packaged beverages, Z number of candy promotions per period? Do you consider how the promotions that you are running fit together to meet the need states of your target customers?
While the first byproduct of any communication is miscommunication, we will assume the stores got the correct information and understood it, then focus on the promotional display and, more specifically, the floor displays.
Unfortunately, many displays are not really displays, but rather visible storage. For example, if it’s storage, customers walk around it, not past it. If it lacks signage and it’s stacked for the store’s or vendor’s convenience, not that of the customer, it should be considered storage. If it has signage and is built so it’s easy to select items, it’s a display.
Take care to ensure the displays don’t create pinch points, which are real or perceived narrow points in the customer’s path. It the space is perceived as too narrow, the customer may perceive that we don’t want them to go down that aisle. Pinch points often are created by displays that extend beyond the width of the shelving or too many freestanding displays sitting in an aisle.
It used to be easy to determine where to place a display: Just put it on an endcap. But today, many suppliers want permanent endcap displays. So what do you do? Leave it up to the store manager? In my experience, that’s not a good idea. Store managers have many things to do and likely will put the display in the easiest spot.
Rather, you should map out where every promotional and permanent display is going to go in your stores. Most customers come into a c-store with a purchase in mind. Knowing their in-store destination will guide where certain types of displays will have the greatest impact. Place the displays with items that complement the destination purchase in the same path the customer will take; or, better yet, put them in the path to the checkout. It’s easier to get their attention once they have made their destination purchase.
A quick note on foodservice promotions, which often rely on bundling: These items are often displayed in different areas of the store, so make sure the promotional plan has signs for every area that references the promotion.
Also be sure the display criteria for foodservice promotions don’t conflict with other metrics used to judge the store’s success. For example, allow for extra food waste if the promotion requires more of the item be available than normal. Otherwise, the store manager is in the uncomfortable spot of trying to determine which is more important: meeting the promo’s display requirements or controlling waste, which may affect their bonus.
This is the moment of truth. Did the promotion succeed or fail? The questions to ask are really the follow-ups to those pre-promotion questions. Did its sales increase, but at the expense of another item? What happened to the sales of the category in terms of dollars and/or units? Did the promotion generate more gross-margin dollars for the item? The category? The average market basket? Did it generate more traffic?
Remember that the success or failure of the promotion is not in the eye of the beholder, but in the hard metrics developed from your answers.
Steve Montgomery is president of b2b Solutions consultancy, based in Lake Forest, Ill. Steve has more than 35 years of experience that spans top management positions in both entrepreneurial and large corporate business environments. He has served as president and member of the Board of Directors for Dairy Mart Corp., and as general manager for convenience stores and manager of convenience retail strategies and programs for Amoco Oil Co. Steve is a past member of the National Association of Convenience Stores (NACS) Retailer Board of Directors and its Supplier Board.