Despite it being one of the oldest practices in the business world, the art of making a special offer has still not quite been refined down to a science. Instead, there are multiple competing theories on which offers are the most effective, and that's before things like regional or demographic factors come into play. Below is a brief breakdown on how different offer types work and what industries they are best suited to.
Freebies
They may come in a lot of different forms - samples, trial
periods, buy-one-get-one-free - but when they are boiled down to their purpose,
these offers are all the same. The concept is that by drawing in new customers
with free products, or just products with greatly reduced prices, those
customers would then continue to buy from the company afterwards.
Source: Unsplash
Keeping a careful balance is the most important with freebies, and
it's the reason industries like online casinos have so many terms behind their
offers. In general, casinos are one of the biggest users of freebie offers, but
it also makes
them prone to bonus-hunting tactics where players try
to exploit the system. That is why there are clear terms and
limits in place to stop the whole thing from backfiring.
Loyalty Schemes
A loyalty scheme can come in many different forms, but the most
common is a points system where customers earn rewards by making purchases.
It's a case of both sides getting something from the deal: the customer gets
rewards, often discounts or extra products, and the business gets a customer
who wants to keep coming back.
When putting a loyalty scheme into place, balance is absolutely
critical. It may be tempting to try and beat the competition with more generous
rewards in your loyalty scheme, but as many companies
found out recently, maintaining big rewards often ends up losing
more money than making it. A loyalty scheme should be both appealing enough to
be worth it to a customer and also conservative enough that scaling up won't
bankrupt you.
Loss Leaders
This is a case more specific to supermarkets than any other
business type, but the case studies are some of the most fascinating. Loss
leaders are products in a supermarket, often daily essentials like bread and
milk, that are deliberately sold at a loss in profits. The idea is that once
customers are already in the building, they'll buy the rest of their groceries
there at the same time, making a profit overall.
Source: Unsplash
This practice has gone to extreme levels at times, most famously in
the 'Baked Bean Wars' a few decades ago where supermarkets competed
to push the price of the staple baked bean tins as low as possible. It got to
the point where one regional store ended up selling at a negative price,
essentially giving money back to customers instead of taking anything. The
practice has since been more carefully controlled, but it shows how powerful
the idea is.
In the end, preparation is the key term here. To make any offer
work takes research, timing, and careful budgeting. Forgetting any of them is
asking for trouble!
Click to signup for FREE news updates, latest information and hottest gists everyday
Advertise on NigerianEye.com to reach thousands of our daily users
No comments
Post a Comment
Kindly drop a comment below.
(Comments are moderated. Clean comments will be approved immediately)
Advert Enquires - Reach out to us at NigerianEye@gmail.com