Why evaluate promotions

Today, CPG and retailer collaboration is more important than ever. Bring it to life to make informed decisions stemming from more factual, actionable promotion evaluation. Simply put, it has generated millions of dollars in validated sales and margin for our retailer clients. High Performance Supply Chain Explore. Integrated Category Planning Explore.

Profitable Revenue Growth Explore. The best estimate is usually the average level of sales of the months prior to the evaluation period, adjusted for seasonal factors obtained from previous years. The company must compare this estimated level of sales to the actual sales that took place over the evaluation period to get the increase resulting from the sales promotion. Sales promotions can generate increased profits.

The volume of additional sales must be large enough to generate profits greater than the cost of the sales promotion. This cost has several components. There are the costs of producing the promotional signs, coupons and publicity.

There are additional costs for processing the coupons, discounts or other incentives. Finally, there are the costs of the promotion itself, such as a discount or rebate. The company must subtract these costs from the additional profits generated by the extra sales to get the true net additional profit that can be attributed to the sales promotion. Sometimes sales promotions are good public-relations vehicles, and can generate interest and return customers.

They may be able to add to consumer brand awareness at a lower cost than other promotional means. In this case, the goal is not additional profits but rather additional sales over the long term, as more consumers become familiar with the advantages of the particular brand. Customer surveys to determine brand familiarity before and after the sales promotion give an accurate evaluation of the immediate success of the promotion.

Revisit the goals and objectives of your promotional plan. Familiarize yourself with numbers and time frames set forth in the plan. These might include the number of sales transactions, total sales or number of weeks. Readjust your goals postevaluation to revise any that are too low, too high or simply unrealistic. Determine whether your promotional efforts were properly targeted.

Reference your sales data to see if you attracted new customers, increased sales frequency or volume, or saw a boost in repeat business. Establish whether your incentives were properly matched to your targeted efforts. For example, if your goal was to attract new customers, did you provide enough low-risk trial offers and samples? Determine if your offers were compelling enough to entice people to buy but modest enough to turn a profit.

Tally up your sales from the promotional period, which might be as easy as adding up the total number of receipts.