Measuring Retail Sales Promotions

150309-2-PIXAR photoThe above photo captures a glimpse of ‘Domino Stars’, featuring Disney PIXAR.  They represent the latest Consumer Sales Promotion being executed by Woolworths Supermarkets.

Since 1998 we have worked with numerous Retailers to help grow their sales and profits.  Often these Retailers have relied on one or two measurements such as total sales volume or value or store traffic for example.  They then use the findings of these measurements as the basis upon which they evaluate the overall Sales Promotion.

There is no doubt that measuring one or two elements of your Sales Promotion is better than no evaluation criteria at all.  However, making decisions regarding investing further or making changes to the Sales Promotion based on only part of the picture may leave room for improvement.

Five Key Measurements for Retail Sales Promotions

Although this article is written with a Retailer in mind, the general principles will apply almost equally to a manufacturer, producer, service provider or almost any other type of business.  You will just need to tweak one or two elements.

The intention behind suggesting you measure more outcomes associated with your Retail Sales Promotion is simply the objective of achieving better quality information to help you make better plans and decisions regarding the current and future Sales Promotions.

1.  Total Sales Value and Volume

This sounds fairly obvious and fundamental.  However, I am often surprised by how much effort is invested in planning and executing Retail Sales Promotions without setting up systems that will provide quality information regarding Sales Value and Sales Volume outcomes.

In order to gain a good understanding of the performance of a Sales Promotion you need to be able to isolate the sales outcomes that are directly linked to the promotion.

2.  Total Customer Traffic

Measuring Total Customer Traffic is almost as obvious and fundamental factor as measuring Total Sales Value and Volume.  However, it is somewhat more difficult to measure without the required technology.

Your transaction point of sales systems will help answer questions related to Sales Volume, Sales Value and Number of Transactions.  However, this does not provide much insight into how many customers did NOT make a purchase.

There are different solutions by industry and business setup and logistics ranging from relatively low-cost doorway located foot counters to video surveillance methods.

3.  Total Number of Purchases

Measuring the Total Number of Purchases provides us with important information regarding the effectiveness of a particular Retail Sales Promotion including:

  • Proportion of store traffic that reflects the Primary Target Market
  • Effectiveness of in-store sales conversion systems i.e. Sales Staff conversion skills and in-store promotions
  • Overall Product/Service mix and price points

If the Total Customer Traffic achieved expectations but the Total Number of Purchases was lower than expected it would suggest that Primary Target Market was missed.

This could mean that the Sales Promotion was too broad in its execution and targeting and that it attracted a high volume of store visitors who were only ‘Tyre kickers’.

4.  Average Value of Purchases

Equipped with an understanding of the Average Value of Purchases you may be able to make informed evaluations regarding the effectiveness of the Retail Sales Promotion including:

  • Proportion of store traffic that reflects the Primary Target Market and not just ‘Tyre Kickers’ making ‘Token’ purchases
  • Effectiveness Sales Staff in Up-selling customers to either higher value items or numerically more items per sale
  • Ability of Sales Staff to manage the level of customer traffic that was generated i.e. if there was too much traffic Sales Staff may have been under too much pressure to perform well in terms of maximising the value of each sale

In some cases a Retail Sales Promotion may generate such a high level of customer traffic that Sales Staff are inundated and unable to perform well in terms of Sales Conversion and/or Up-selling outcomes

5.  Total Profits Generated by Sales Promotion

If we are serious about evaluating the profitability of a particular sales promotion we need to ensure that we have captured complete information regarding the total investment including:

  • All in-store promotional materials
  • All external advertising and communications both off-line and on-line
  • All Sales Staff training and development
  • Any demonstration stock, write-offs or cost of returns etc.
  • Any other expenses associated with executing the Retail Sales Promotion

Marketing Metrics and Beyond

The above criteria for measurement is often referred to as Marketing Metrics.  There are numerous other inputs and outputs that you can measure when executing Sales Promotions.  I encourage you to give consideration to exactly which inputs and/or outputs you will benefit most from measuring each time you execute a Retail Sales Promotion.

I think it is clear that capturing the outcomes of your Sales Promotions from more than one perspective may provide increased understanding regarding what is working for your business and what is not working quite as well.

If you are keen to read more about Primary Target Market selection, Brand Positioning or Promotions Planning then some of the articles that I have written previously may help you with a couple of the topics referred to above.  Namely, Target Market Selection,  Brand Positioning – Making the right impression and Promotions Planning – Selecting the most powerful marketing tools 

Please feel free to contact me if you would like any additional assistance in planning or executing your Sales Promotions.




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