Real World Promotion - Part 2...

My family was on the road. Tight schedule. We needed to grab dinner and keep moving.

"Where do you want to eat?" Beth asked looking in her wallet.

"I don't know, how about The Encore?" I replied.

"No time for sit down," she said "Besides I don't have much cash. Did you stop at the bank?"

" BK has 3 under $3. McD's has 2 for $2.22. Do either of those sound good?"

"Naw," Beth said. "Hey, I just found an IHOP coupon: 'Buy One, Get One Free'."

"It's sit down. We need fast food," I reminded her. "I know -- Arby's has 5 for $5."

"Do you think they take credit cards?" she asked. (I should have stopped at the bank.)

But who'd think an entire adult conversation could be about promotional offers?

Promotions are limited-time incentive programs to get a customer to buy now -- like coupons, rebates, on-pack offers, and price incentives. About a quarter billion dollars will go to promotions this year, roughly half of all marketing spending. Why? A couple reasons. It can be timed to seasonal sales highs or lows. And the results can be measured.

So what's a good response to a promotion? Some marketers count coupons. That tells you how popular a promotion is. If a "two for one" coupon has a high percentage response the offer strikes a responsive cord with your target market. That's good.

I prefer to take it a step further and compare dollars spent on the promotion with dollars earned. Not sales. Profits. For every dollar you spend you want to earn back MORE than a dollar back.

It's obvious. If not, you're better off standing on a street corner handing out money.

Actually, Washington Mutual did a promotion like that here in Chicago. They posted people downtown handing out $1.50 to passersby. It wasn't technically a promotion, but a publicity stunt to draw attention to surcharge-free ATMs. "The buck and a half stops here." The Washington Mutual T-shirts shouted.

So what if your promotions aren't making more than it cost? How can you fix it? More next time…

-- Phil Sasso