It may be a sign of the hard economic times, but people called and came in to thank me for putting a flyer on their car. The two teams blanketed the area yesterday, braving cold weather and various security and law enforcement groups. Anyplace that had posted signs forbidding soliciting was skipped, but the teams hit up every other place until asked to stop, which happened a lot. What was the result?
We were open from 7:30am to 11pm and we doubled our gross sales for the day compared to last year, informed 2,000 people of our existence and special sale, and hopefully created some new, long-term customers. People were walking in with flyers and buying up toys and puzzles, but there was also game sale cross-over, which was the bulk of our sales, and at full price. Some people came in after getting a flyer, with hopes we had games on sale too, and although some were disappointed a few became new game customers. We also had unusually high turnout from our regulars. The high level of game sales meant our cost of goods was still in the acceptable range, something Best Buy and Fry's can't claim from yesterday. But did we make money?
Kinda. The net profit for the day covered the cost of the promotion, which made it a cash flow win in the short term and hopefully a new customer win in the long term. If we weren't going to drop a lot of the toys we sold, it would have been a loser, since we're essentially spending a lot of money to make a very tiny profit. This is why I say it works for us in this instance, but I don't recommend this strategy to anyone else. Clearance sales are great, but sales on product you're going to re-order is pointless. Since we're not re-ordering a lot of the toys, mostly because we have them in quantity or they haven't sold, we can pocket a lot of our inventory dollars, mostly to pay for other product. We covered our costs in day one, so any follow-up sales resulting from the promotion should be profitable (it's a 3 day promotion).
Finally, if we gain just a single long-term customer from the promotion, it was worth it as an investment. Right now we're focused on the short term and investing is the last thing on my mind, but this is the real value of advertising, creating long term customers. In any case, the store's marketing budget was offset to cover this promotion, so rather than more TV spots, we tried something new, and I think it was a success. All my direct analysis of whether the promotion worked or not is kind of moot, since the money came out of a pot already accounted for in my cost-of-goods. We won't do this particular type of guerrilla marketing again, but we'll be trying other low cost methods to drum up business.
woot. I ran away from the law.ReplyDelete