Promotional Pricing is a powerful sales strategy that can assist in retaining customers and bringing in new customers. However, one of the biggest reasons promotional pricing can be ineffective is if your POS system cannot handle changes or increases in customer demands. To prepare yourself for the holiday season, it is time to consider how your POS system handles promotions.
Why are promotional prices important?
Often people consider promotional prices as one-day sale events; however, it is not just when you have sales that promotional pricing can be applied. Promotional pricing assists in customer retention, segmentation of wholesale, trade and retail customers, and increasing brand awareness.
Suppose you are able to provide some of your highest value customers discounts on products they usually purchase. In that case, they begin to consciously choose your business over your competitors, which in time increases your revenue growth and allows you to hold a greater market share.
In particular, in value-oriented markets, pricing plays a strong psychological role; the colour of tags and the language used when marketing sales adds a sense of urgency significance to your products and services.
The Real Costs of Products
Pricing strategies can be pretty complex, so it is not as easy as slashing prices, despite what customers may think. There are a lot of costs involved when it comes to pricing products. Some products will have a base price and base mark up, a recommended retail price, or price fluctuations depending on location or season. Two of the most significant costs involved in pricing are Real Cost and Material Cost, as they can determine how much gross revenue a company achieves.
Types of Promotional Pricing
Outside of sale events such as Black Friday and Boxing Day, you can choose to implement three different types of promotional pricing strategies.
Trade or Wholesale Price
For trade or wholesale customers, you can apply a lower mark-up percentage than you have for your regular customers. This can be an incentive to retain customers and achieve a greater share of the market.
Club Pricing and Loyalty Programs
Club pricing and customer loyalty programs allow you to reward frequent customers with special pricing and secret sales. This particular type of segmentation is an attractive way to increase customer retention as it shows you value your customer’s purchases. Additionally, you can provide promotional resources to these customers, which can increase the order value.
As a reward for purchasing more, you can have a discount applied only when a certain quantity is met. This will encourage your customers to make bigger purchases from you so that they can receive the benefits of a cheaper price.
Sale events are still one of the most significant ways to attract a larger customer base; however, meeting customer demand during Boxing Day can be a challenge. One of the ways you can prepare and remedy this challenge is by setting up promotional prices in advance and by including a start and end time on the promotional prices. This means they will automatically be applied during the sale times and will switch off post-sales. It’s beneficial because it streamlines the entire process, increasing productivity and sales while also preventing manual input and human errors.
The Acumen Difference
Acumen POS Systems are designed to help businesses streamline their processes. When implementing pricing strategies, it is broken down into a step by step formula that is simple to follow.
Our system also uses an inbuilt reporting system to provide our clients with customer data, seasonal patterns and ideas about slow-moving stock to assist with inventory management and improve your profit margins. Additionally, when promotional pricing is implemented, it will search the database to apply the best price to the customer every time.
As it is easy to set up and manage, we recommend that businesses keep pricing strategies up to date by reviewing every quarter to reflect your business succession plan.
Get in touch with the Acumen team if you need guidance with your promotional pricing strategy and POS solutions.