Is buy 1 take 1 effective?

blog.wiser.com - How Buy One, Get One Can Improve Your Sales - Wiser Retail Strategies

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There are many different methods to increase your sales. Discounts are an effective short-term strategy that retailers use when inventory is moving slower than expected. Contrary to popular belief, not all discount techniques are created equal. Though traditional discount sales are effective, Buy One, Get One (BOGO) has become one of the more popular choices for retailers lately. To help you boost sales and profits, we broke down how and why BOGO works.

BOGO: Free or Percent Off?

It goes without saying that shoppers like getting items for free. According to behavioral economics researcher Dan Ariely, shoppers generally overvalue the benefits of “free” even when compared to higher-quality items at a discounted price. For example, people would choose a free Hershey’s Kiss over a 14 cent Lindt truffle. We see this happening in the retail industry all the time. When Amazon first introduced free shipping in some parts of Europe, they saw a significant increase in sales for all places except for France. The reason why France’s sales were not on par with the other countries was that instead of free, shipping’s cost was mistakenly reduced to 1 franc (about 10 cents at the time). To shoppers, no matter how large the discount, it does not stand a chance against “free.”

Benefits of Buy One, Get One

BOGO is a great discount technique to use to appeal to consumers. Big companies such as TOMS and Chipotle have seen a lot of success with BOGO promotions. Here are a few ways you can benefit from the strategy.

Moving Inventory While Profiting

Buy One, Get One is a great tool that can help you get rid of your less desirable inventory quicker and maintain profitability at the same time. Imagine that you are selling an item for $10 that cost you $2.50. If you place a half-off sale on this item, you would make a $2.50 profit from selling one. Now, if you offered the item in a BOGO sale, you’d be able to make a $5 profit ($10 revenue – $5 cost = $5). By selling multiple items at once, you can solve your case of slow-moving inventory while staying in the positive.

Better Response from Shoppers

Both retailers and shoppers love BOGO. In a report from AMG, 66 percent of shoppers say that they like BOGO the most out of all discount promotions. They also found that 93 percent of shoppers report that they have taken advantage of BOGO promotions at least once. Professor Priti Salvi of S. V. Institute of Management, Kadi found that shoppers are more likely to participate in BOGO promotions because the products seem to have no extra cost and are more valuable due to the deal. Get on shoppers’ good sides with a Buy One, Get One promotion. Even as both consumers and shoppers appreciate a Buy One, Get One promotion, differences remain between a good BOGO deal and a poor one.

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Let’s explore what you can do to set your next BOGO promotion apart from your competitors.

1. Create a Target Audience

Once you’ve figured out what you’re selling, it is important to know whom you’re selling to. BOGO can help you achieve one of the biggest retail goals, creating loyal customers. The White House Office of Consumer Affairs found that on average, loyal customers are worth up to ten times their first purchase. To maximize the opportunity, the best method is to find a target audience. Creating a target audience can help cut costs and time because you know what you’re focusing on, rather than trying to appeal to everyone. With a target audience, you can decide what items to exhibit in your BOGO promotion efficiently. For example, if you’re trying to promote backpacks, the target audience for your promotion would generally be students, meaning you would try to advertise on platforms that students frequent. Creating a target audience can help you win the hearts of shoppers and make a promotion efficient.

2. Create Urgency

Like any other promotion, creating urgency is essential for a successful Buy One, Get One promotion. By setting up a deadline for your BOGO sales, you can incentivize shoppers to act sooner due to the fear of missing out. Through an online platform, retailers can use countdown clocks to show the remaining time of the sale. The clock shows the time running out and can create urgency for the shopper to purchase the item sooner rather than later. There are many different platforms available for you to advertise your BOGO promotion on. If you own a brick and mortar or pop-up shop, you can go old school and advertise your BOGO promotion offline. Besides covering your store with flyers, you can use your store layout to advertise your BOGO promotion by leveraging music, product displays, lighting, and even climate control to present the best shopping experience as possible. Visual merchandising is a great tool to grab shoppers’ attention and advertise BOGO promotions. There are many opportunities in traditional online advertising to promote your BOGO deal. By investing in on-site advertising, you can reach out to your target audience with the websites they visit most. For example, if you’re targeting rock climbers, post on-site advertisements on rock climbing blogs and forums. Mobile is a huge part of the online retail industry . Data from eMarketer found that global mCommerce sales were greater than $1.3 trillion in 2017, nearly 59 percent of digital sales worldwide. Advertise on mobile channels by leveraging social media and email marketing to reach out to shoppers on the go. According to Stone Temple, 63 percent of U.S. web traffic in 2017 came from a mobile device. That is up from 57 percent in 2016. Take advantage of all channels to ensure you create the most buzz possible.

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4. Leverage Social Media

Social media is growing and retailers cannot afford to ignore it. In fact, 52 percent of adults who use the internet actively use two or more social media sites. Depending on your target market, how you use social media should vary to match their usage patterns. For instance, if you are targeting baby boomers, you should share your BOGO sales on Facebook as opposed to Instagram. Additionally, not only can you use social media to advertise your BOGO sales, but you can also use it to address complaints and receive feedback. Consumers who are satisfied with their purchase and share their experience on social media can provide free advertising. Of consumers who leave a negative review or comment on social media, 57 percent said they expect the brand to reply. Of those, 93 percent said their loyalty to the brand would be negatively impacted if the retailer didn’t respond. Utilizing social media actively to respond to customers and share sales can be beneficial, as 71 percent of consumers who have good social media service experiences with brands are likely to recommend it to others. BOGO sales can be one of the most effective types of promotions. If executed properly, you can see higher sales, bigger orders, and better conversion rates. A well-executed Buy One, Get One deal is a plus for your business and for your shoppers, which is why it is understandable that retailers have jumped on the BOGO hype. Of course, you need to make sure your BOGO promotions work for your products and services. Connect with Wiser to learn more about our market intelligence, compliance, and optimization solutions that can help support your next Buy One, Get One deal. Editor’s Note: Contributing writers are Arie Shpanya, Min-Jee Hwang, and Don Dao. This post was originally published in August 2015 and has since been updated and refreshed for readability and accuracy.

blog.wiser.com - How Buy One, Get One Can Improve Your Sales - Wiser Retail Strategies

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