No business wants to be left with excess stock, but unfortunately this is inevitable for even the most successful CPG companies. That’s because excess inventory often results from factors outside of your control -- Unseasonal weather, economic instability, and fluctuations in demand are all factors that can result in a surplus of products that need to be shifted. And that’s where discounting strategies come in.
An effective discounting strategy is one way in which businesses can plan for excess inventory, to clear unwanted products quickly, efficiently and profitably. Building an effective discounting strategy isn’t a difficult task, and it pays to have one in place if you ever find yourself in a tricky situation. Here are five tips on how to build an effective discounting strategy for your brand.
Personalise Your Discounts
In today’s digital world, the power of data has never been greater. That’s great news for those planning discounting strategies. Start by segmenting your existing customer data to get to know the key personas buying your products. Then, make use of the knowledge at your fingertips by creating personalised, tailored sales to appeal to different audiences. This tailored approach will enable you to target particular demographics with pinpoint accuracy, with potentially great results in terms of sales.
Get the Timing Right
If you’re discounting in order to get rid of excess stock, it’s likely that bad timing is one of the reasons. Don’t fall into the same trap again. Pay attention to the times at which customers are most likely to purchase your products, and plan your promotions around this. Analyse the times, dates and months when certain products are flying out of the door, and create similar discount sales to push at these specific times. This might involve keeping hold of excess stock a little longer than you’d planned, but it’ll be worth the wait.
Incentivise Further Purchases
Discounting the products you’d like to sell is one thing, but it’s also important to incentivise further purchases. If a customer is buying one of your sale items, they’re already interested in your brand. This is therefore a key opportunity to boost your profits by tempting them to add a few more items to their basket. Consider deals such as buy one item for $99, and get a second for $70. Other promotions like buy one get one free, or buy one get one half price are also effective in discount sales.
Try Something New
If you’ve been in business for any length of time, you’ll likely have promoted sales and other discounts on numerous occasions. However, you might not have tried every opportunity available. There are many different discounting channels available to businesses, each with its own distinct advantages and disadvantages. Off-price channels, for example, enable businesses to shift stock quickly, with minimal fuss.
Avoid Potential Pitfalls
All too often businesses find themselves coming up with discounting strategies in a rush. These strategies can be reactive, resulting from unforeseen circumstances that threaten to derail cash flow without swift action. As a result, due care is not given to such strategies, and businesses find themselves falling into common pitfalls further down the line.
We always recommend that companies creating any type of discount sale take a step back to think about the campaign’s key objectives before they begin. With these in mind, discounts can be designed and tailored to specific business goals, be those shifting excess inventory, attracting new customers or improving customer loyalty. ROI tools should be used throughout the planning process, to ensure that all discounted products remain sufficiently profitable.
