For small retail businesses, generating a buzz and driving sales is essential for sustainability and growth.

To this end, the first order of business is ensuring your products or services provide substantial value to your target audience. Even if you’ve got this part covered, you’ll still need to ensure prospective customers engage with your brand to experience the value you offer them.

That’s where promotional sales, events and offers come into play.

We’ll cover some of the most effective sales promotion ideas retailers can use to make sure this happens.

What Is a Sales Promotion?

A sales promotion is an offer, event or other planned occurrence put on by a brand that provides value to the customer — and spurring sales for the business.

Why do businesses use sales promotions?

  • Attract and engage new customers as well as maintain and enhance the engagement of current customers
  • Provide value to the customer — on top of what’s provided by the company’s main product or service
  • Increase sales for the company

Sales promotions are meant to create a win-win situation for both the customer and the company. Promotional sales campaigns must result in an overall increase in value received by both parties to be effective.

Here are some sales promotion tips to use to generate engagement and sales.

Why Should Sales Promotions Be Part of Your Marketing Strategy?

Today’s consumers like receiving discounts and other promotional offers — so much so that they basically expect to receive them. Case in point: According to eMarketer, more than 80% of millennials hunt for coupons and other offers during most of their shopping experiences.

Promotional offers encourage new and existing customers alike to go through with a given purchase, according to Inc., citing a survey from RetailMeNot. A promotion can be the reason a hesitant shopper decides to make a purchase.

In many cases, promotional offers can increase a consumer’s trust in a given retailer. In turn, these loyal customers are more likely to tell their friends, family members and colleagues about their positive experiences with a particular brand.

For your promotional campaigns to lead to such positive outcomes, you need to approach them strategically — and with your customers’ needs and expectations in mind. You also should be certain the value you receive from your customers through these initiatives is worth the investment.

Some sales promotion examples include coupons and rebates.

4 Effective Sales Promotions to Offer Your Retail Customers

While there are various approaches to offering promotions, some methods may be more or less effective in engaging your specific audience. It all depends on a number of factors, such as:

  • The type of products or services you offer
  • Your customer persona(s)
  • The expectations your customers have when engaging with your brand

With that in mind, let’s dig into four of the most common and effective types of promotions to use to spur engagement and sales for your small retail business.

Discounts, Coupons, and Rebates

Discounts, coupons and rebates all center on one thing — saving your customers money on their purchases from your company.

However, each differs in how they go about doing so:

  • A discount is a typically temporary reduction in the price of a given product that is provided to all customers or to patrons who meet specific criteria.
  • Coupons are vouchers providing a discount or other promotional offer.
  • Rebates provide discounts to customers after a purchase has been made. In other words, the customer will receive monetary compensation after making a purchase and submitting the rebate offer to the retailer.

Most often, the value of a promotion comes in the form of a specified monetary amount, as seen in this coupon from Big Lots.

Most often, the value of a promotion comes in the form of a specified monetary amount, as seen in this coupon from Big Lots.

It can also be a percentage off the retail price of a product from a wine club.

It can also be a percentage off the retail price of a product from a wine club.

Or it’s a discount on additional costs, such as shipping from J. Crew.

Or it’s a discount on additional costs, such as shipping from J. Crew.

When offering discounts or rebates, there are two key things to keep in mind:

  1. Ensure the value of the offer is substantial enough to stir your customers to action. For example, a $5 discount on a $1,000 product probably won’t do much to convince your customers to convert.
  2. On the other hand, don’t go overboard with your promotional discounts to the point that they cut into your bottom line. A 75% discount probably will generate a ton of additional sales — but it’s going to destroy your profit margin.

Determine the optimal discount offer to provide your customers that raises the chances of converting and leads to an increase in your bottom line. This requires digging into your costs, your sought-after profit levels and the average order value of your customers — among other pieces of data specific to your business.

Samples, Freebies and Loss Leaders

Another way to drive engagement and increase sales is to offer free or low-cost products to your customers.

Offering free samples gives potential customers a quick taste of the value of your product or service — with zero risk on their part.

Costco offers this “quick taste” in the most literal sense possible.

Similarly, offering freebies provides another no-risk situation for your customers, but typically are a bit more personalized. For example, online grocery retailer Thrive Market often includes one or two free items with shipments that specifically align with the individual customer’s preferences.

Looking at previous shopping orders, Thrive Market shipped a customer a complimentary box of cupcake and cake mix.

Another approach is to offer what is known as a loss leader — a product that’s typically sold for minimal profit (or, often, at a loss), with the goal of recouping lost profits through subsequent sales of related items.

For example, companies such as Gillette lose money on initial purchases of their razors, with the understanding that their customers will need to continually purchase replacement blades (known as the “bait and hook” business model). Not only are the blades sold for massive profits in the first place, but they’re also guaranteed to fly off the shelves on a regular basis — leading to enormous revenues for the providing company.

In each of these cases, customers come to understand the value of the product in question immediately with no risk to their wallets. In turn, this minimal upfront loss allows the company to thrive well into the future.

Point-of-Sale Offers

There may be no better time to spring an additional offer on your customers than when they’re just about to complete an initial purchase.

Not only are customers already in “buying mode,” they may need one or two supplemental items to add value to their original purchases. The easier you make it for them to find these products, the more likely they’ll buy them.

In brick-and-mortar stores, point-of-sale (POS) offers are often seen in what we know as the “impulse aisle.”

“Well, I’m already spending $150 on home decor. What’s another $10?”

For online retailers, POS offers are typically personalized based on the items in the customer’s current shopping cart:

Such offers can be presented before, during, or even after conversion.

Two things to keep in mind when making POS offers online:

  1. The products you offer at the POS need to be highly relevant to your customer’s needs. For example, notice the suggested items in the screenshot above revolve around paper office supplies.
  2. The prices of the items you suggest need to be somewhat aligned with the customer’s initial spending. Again, in the screenshot above, note the prices of the first three suggested products are about 20% the cost of the original item and the most expensive product costs about 23% more.

In other words, each suggested product provides additional value to the customer without causing them to spend much more than they anticipated. Because existing customers are much more likely to make other purchases than first-time customers, providing these additional offers will almost definitely lead to higher revenues for your company.

Loyalty Programs

We’ve focused on temporary or situational promotions to stir your customers to take action, but there’s something to be said about playing the long game. Developing a loyalty program can allow you to do just that.

The goal of a loyalty program is to provide more specific promotions, sales, and deals to your top customers. These deals often involve many of the strategies we’ve discussed — and can involve more recreational experiences revolving around your brand.

For example, Starbucks’ loyalty program allows regular customers to collect “stars” (points) that can be exchanged for free food or drink items as well as other products (such as mugs and thermoses).

Starbucks' loyalty program helped drive customer engagement.

Loyal Starbucks customers can collect stars both by making regular purchases and completing “challenges” that are tailored to individual experiences with the brand. For example, customers who semi-regularly purchase breakfast sandwiches along with a morning coffee may be tasked with buying a certain sandwich multiple days in a row.

On the customers’ side, they earn more stars for spending more cash — which allows them to earn more free offers over time. On the company’s side, this leads to more — and more intensive — engagement among the brand’s most loyal customers — which ultimately translates into additional opportunities to generate higher revenues.

A Final Thought on Sales Promotions

Promoting your brand often involves going above and beyond in terms of the value you provide your customers. That value typically comes in the form of:

  • Monetary savings
  • Complementary products or services
  • Additional branded experiences

It’s essential to think long-term here. Think of your promotional campaigns not as an upfront loss, but an investment that will pay off in dividends. A discount or freebie today may generate an increase in business tomorrow.