Sales promotions are one of the oldest marketing techniques in retail, and for good reason: they work. In 2023, a staggering 92% of shoppers in the US used a coupon or discount code.
A promotion can be used to get rid of old inventory and make room for new products. It could also be a seasonal campaign, like Black Friday or Cyber Monday, to capitalize on consumer spending. Or perhaps you're launching a new product line and are eager to attract customers.
Whatever the reason for it, a sales promotion is a great way to boost your retail sales performance. Ahead, you’ll learn how to run sales promotions to improve revenue and visibility for your brand.
What is a sales promotion?
A sales promotion is a marketing activity designed to increase sales, encourage customer loyalty, or generate brand awareness. It usually involves offering a discount or some other type of incentive for customers to buy your product or engage with your brand.
A sales promotion is usually a temporary part of a larger marketing plan. It can be run for various reasons, but the end goal is always to increase sales.
Benefits of sales promotions
Sales promotions have two main benefits: increase sales and build loyalty.
Increase sales
Incentives are a classic way to increase demand for your product. They don't have to be complicated—give people incentives to buy, like discounts or deals, and they will buy more.
Promotions are particularly important for major shopping events like Black Friday and Cyber Monday. These holiday shopping periods present opportunities for retailers and sales teams to run promotions that boost sales and attract new customers.
For example, during Black Friday in 2023, more than 55,000 merchants experienced their highest-selling day ever on Shopify. Collectively, they reached a record of $9.3 billion in sales over the holiday weekend, a 24% increase from 2023.
Build loyalty
Consumer sales promotions can also encourage loyal customers to come back and buy from you repeatedly.
Customers sometimes need a little push to rekindle their relationship with your brand. A crowded market, coffee, for example, will provide them with plenty of choices. However, you might be able to convince a customer to buy this week's bag of beans from you instead of a competitor if you run a promotion. They may even switch to you as their regular supplier after remembering how tasty your beans are. In this way, a single promotion can affect multiple transactions.
📌 GET STARTED: Choose from hundreds of loyalty apps in the Shopify App Store and start rewarding shoppers for purchases they make both online and in-store.
Cons of sales promotions
The two primary drawbacks of sales promotions are the potential to devalue your brand and the possibility of generating misleading sales data.
- It can devalue your brand. Promotions can sometimes make your offering seem cheap. Too many promotions or the wrong type of promotions can hurt your brand's image. One study found that new customers whose first transaction involves a price reduction or special offer are 50% less likely to return to make a second purchase. So, when running promos, ask yourself whether the short-term boost is worth the potential loss in lifetime value (CLV).
- It can generate misleading sales data. When you launch a new product at a discount, this effect is particularly pronounced. Promotions can boost sales for new items, but the demand needs to be strong enough to last after the promotion ends.
Types of sales promotion techniques
- Giveaways
- Bundling
- BOGO
- Free shipping
- Charitable donations
- Flash sales
- Subscriptions
- Upsells
- Coupons
- First-time purchasers
Let's take a closer look at these different types of sales promotions.
1. Giveaways
Giveaways are when you offer a prize in return for participation in a publicity event. This covers everything from sweepstakes to raffles, lotteries, and contests, so you must be mindful of what's legal in your area.
You can give away anything from free items to branded merchandise or something else. Indie Wild ran a Black Friday Cyber Monday giveaway last year where participants could win an iPhone 15 and one of every product in their store. To enter, participants just had to screenshot a picture of their order and post it on Instagram Reels.
2. Bundling
By bundling, you can offer discounts only available when two or more items are purchased together. Selling bundles can help to increase your average order value, provide value in the form of curation to your customers, clear out old inventory, and drive more visibility for your products. 3. Free trials and products
Free trials and products are a great way to attract new customers and build loyalty. They allow customers to try out your product or service for free without committing to anything.
3. BOGO
Also known as BOGOF, this refers to a 'buy one, get one free' deal. It's a compelling offer to customers who see it as a big saving.
You might think you're losing revenue to the value of one item. However, an increase in volume can be more profitable than selling single items depending on your profit margin per item.
Brands run BOGO sales all year round but prioritize them on BFCM. You can post these sales on social media and drive traffic to your site like the supplements brand Alani Nu did last year.
4. Charitable donations
Including a charitable donation with each order can be a mutually beneficial agreement. Customers feel good about helping a worthy cause, the charity benefits from increased income, and you benefit from allying yourself with a good cause.
5. Free shipping
Free shipping can be an attractive offer for ecommerce and mail-order brands that usually charge for it. You could offer it for every new order, to entice new customers, or for every order above a certain value. There will be some calculations to make when deciding what's financially viable.
Run free shipping promos throughout the year or on special occasions like BFCM or Christmas. You can also combine free shipping promos with other discounts, as Light Your Home did during last year’s BFCM weekend.
6. Subscriptions
Subscriptions can cover information products (like publications or digital goods) or physical products (like grocery items). A typical promotion involves giving the customer a certain percentage discount in return for committing to purchase multiple times.
One of the best-known is Amazon's Subscribe & Save offer. For thousands of products, you can gain a 5%, 10%, or 15% discount when you choose a recurring purchase.
7. Upsells
An upsell is when you offer a customer an additional, upgraded product or service when you're making the sale. For example, a brand may encourage you to upgrade to a better pair of hair clips. Upsells are usually much easier than regular sales because the customer is prepared to purchase.
💡 PRO TIP: Try using apps to upsell and cross-sell more effectively. Apps like Marsello and Frequently Bought Together integrate with Shopify POS and recommend products to store staff based on what they’ve added to a customer’s cart. This makes it easier to suggest relevant products and increases basket sizes and order values.
8. Flash sales
A flash sale is a limited-time sale that offers deep discounts on a particular range of products. Often, they're not revealed until the last minute, giving shoppers a sense of urgency and causing them to rush to purchase items before they sell out.
These promotions are massive during BFCM weekend. In 2023, skincare brand The Phix promoted its flash sale bundles on TikTok Shop. In the app, viewers could get an overview of the items and countdown until the deal was over.
📌 GET STARTED: With Shopify, creating discount codes for online and in-store purchases is simple. To determine how often your returns discount code is used, view the Sales by discount report in Shopify admin.
9. Coupons
Coupons are physical or digital vouchers that offer discounts on products or services. The retailer can offer them or third-party sites like Groupon. One report from Vericast found that 60% of shoppers are looking for more coupons, discounts, and deals to offset higher prices.
10. First-time purchasers
You can entice new customers by offering them promotions for their first purchase. The promotion can be almost any benefit: reduced prices, free shipping, additional items or accessories, educational content, or one-on-one calls to show them how to use the product. The benefit: welcoming them to the brand and building loyalty.
💡 PRO TIP: How effectively do you attract and retain customers over time? View the First-time vs. returning customer sales report in Shopify admin to see how many orders come from new or returning customers, the total value of those sales, and more.
Sales promotion strategies
There are three main strategies for running sales promotions.
Push strategy
A push strategy involves 'pushing' your product toward your customers. It will be placed in a prominent location that gets your customers' attention, for example, at a point of purchase.
When your product is immediately available in a situation of need, your customer is more likely to purchase it. Push strategies often involve impulsive decisions. Consider the snacks on display at the grocery store. The products are 'pushed' to customers at the checkout stand, where they are most likely to buy.
Pull strategy
Pull strategies involve making your customers want to buy your products. Thus, they construct an advertising campaign, give away freebies, and offer seasonal discounts to make your brand more visible.
Once customers believe your product is the one for them, they will choose it over your competitors. As promotions you run will create demand for your products, you don't have to appeal to impulse buying.
💡 PRO TIP: Want to create beautifully branded emails to promote your next product launch? Use Shopify Email to create, send, and track campaigns, all from within Shopify—no coding experience required.
Hybrid strategy
A hybrid strategy combines push and pull tactics. Using both, you can reach customers at each marketing funnel stage.
Sales promotion ideas
- Offer free samples
- Run social media giveaways
- Give out referral bonuses
- Try cashback promotions
- Create a loyalty rewards program
- Organize seasonal promotions
Promotions can take many forms, providing endless opportunities for creativity. The key is to be creative and cater to the needs of your target audience without going over budget.
Here are a few ideas to get you started:
Offer free samples
The best way to get your product in customers' hands is to give it to them for free, if you're confident they'll like it (and are ready to get some feedback). You can give free samples of your store, on your ecommerce website or even at pop-ups, as Kylie Cosmetics did at an event in Toronto in 2023.
Run social media giveaways
Social media is the perfect place to organize giveaways in return for engagement. You could partner with an influencer or complementary brand to extend the reach of your giveaway.
Give out referral bonuses
You can offer bonuses to customers who refer you to other potential customers. This is simple enough on most ecommerce platforms through referral codes. Bike transmission retailer WheelTop allows customers to earn 4% cashback by sharing their unique referral link with friends.
When friends purchase through the link, they receive a 3% discount, and the referrer earns a 4% commission if the purchase is retained for 45 days without returns or refunds. Participants can track their rewards through a ReferralCandy account, with cashback payouts made to their PayPal account within 30 days after the 45-day review period.
Try cashback promotions
Cashback promotions reward customers for spending their hard-earned money with you. With a cashback program, customers can easily earn cash back to spend at your store. They can combine the cash they get back with coupons, promo codes, and deals to maximize their savings.
Create a loyalty rewards program
Rewards as part of a loyalty program can work wonders for repeat purchases, like food, drink, household, or cosmetic items. For every five or ten purchases, you can give a free item, for example.
LIVELY's rewards program allows members to earn points on purchases and various activities, which can be redeemed for discounts and free products. The program has three tiers—Insider, Inner Circle, and VIP—with increasing benefits based on annual spending and engagement.
Members can earn points by creating an account, making purchases, leaving reviews, and following LIVELY on social media, with opportunities to redeem points for rewards ranging from $10 off to free merchandise.
Organize seasonal promotions
As well as the meteorological seasons, there are cultural and religious holidays, international celebration days, and fun pop-culture events (like May 4th - Star Wars Day). That's a lot of opportunities to run a successful sales promotion.
Sales promotion example
Consider Sarah, the owner of a fictional bookstore and cafe in a suburban area. As BCFM approaches, she’s excited but nervous. Last year, the jump in online orders overwhelmed her as she struggled to keep track of inventory between her physical store and website.
This year for BFCM, Sarah runs a “Reader’s Delight” promotion. For 48 hours only, all books are 30% off, and every customer gets a free hot chocolate with an in-store purchase.
As customers stream in Friday morning, Sarah's staff uses tablets with Shopify POS to check out customers in the aisles, keeping lines short. The system automatically applies the 30% discount, and staff can easily add the free hot chocolate to each order.
Meanwhile, online orders start pouring in. Thanks to Shopify POS's unified inventory system, Sarah can see real-time stock levels across both channels. When "The Midnight Library" sells out online, the system automatically shows in-store availability, allowing online customers to reserve for in-store pickup.
By Saturday afternoon, Sarah notices "Cheeky Mystery" books flying off the shelves. Using Shopify POS's discount tools, she quickly creates a flash sale for this category that applies instantly both in-store and online.
On Cyber Monday, Sarah launches exclusive online deals. However, many customers still visit the store. Using Shopify POS, her staff can easily place online orders for VIP customers so they don't miss out on web-only discounts.
Shopify’s unified POS system helped Sarah provide a seamless shopping experience, whether customers shopped online, in-store, or both. Real-time inventory management, flexible checkout options, and omnichannel promotions helped her business maximize sales (and minimize stress) during the year's busiest shopping weekend.
Start running your own sales promotions
Sales promotions are a tried and tested way to increase retail performance. By using the right mix of tactics, you can appeal to customers at different stages of the buying journey and maximize the ROI of your efforts.
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Sales promotion FAQ
What do you mean by sales promotion?
Sales promotion is a marketing technique businesses use to stimulate consumer demand for a product or service. This can include discounts, coupons, contests, samples, or any other incentive that encourages people to purchase a product or service.
What is a sales promotion quizlet?
Sales promotion is a marketing tool to increase consumer demand, stimulate market demand, or improve product availability. It provides extra value or incentive to customers and can take the form of coupons, discounts, freebies, contests, sweepstakes, loyalty programs, and more.
What is a sales promotion role in marketing?
A sales promotion campaign plays an important role in marketing by helping to increase sales and create customer loyalty. It can attract new customers, retain existing customers, introduce new products, and reward customers for loyalty. Sales promotions can also increase the visibility of a product or service, create a sense of urgency or excitement, and reduce the risk of purchase. They can also build brand awareness and improve overall customer experience.