Promotional pricing doesn't work for every business or industry. You should understand your target audience before deciding to cut prices. Identify customer segments and personas to determine whether a price change will impact demand at all. For instance, if your customers purchase luxury products, a price reduction might deter them.
You should understand your customers' needs and preferences while customizing promotional pricing to appeal to different segments. For instance, even luxury items may have a market for individuals who earn less per year when they reduce their prices.
Conducting marketing research and competitor analysis can help you determine whether an increase or decrease in pricing is right for your brand.
Before slashing prices, always determine which strategy you should use. For instance, bulk pricing might not make sense for your business, but flash sales do. Select the appropriate promotional pricing tactic based on what you know about your target audience.
For instance, consumers tend to shop more during the holidays, so a limited-time promotional pricing tactic might work best for your business then. Meanwhile, a flash sale might drive revenue during the slower seasons.
Always analyze the price elasticity of your products and sensitivity. If demand increases drastically when you decrease prices, finding the right time to implement a promotional pricing strategy can help you maximize profits.
You should also consider the duration and timing of the promotion. While giving consumers enough time to make a purchasing decision can increase profits, limited-time promotions may perform better because they make customers want to take immediate action.
Remember, a promotional pricing strategy won't work for every business. You should assess the long-term effects on brand perception and customer loyalty. For instance, if your customers expect luxury pricing on high-end products, using a promotional pricing strategy can hurt your reputation because customers will think it's lower quality.
Once you've determined the promotional tactic you want to use and have worked out the logistics, like what the new pricing is and how long your deals will last, it's time to communicate with your customers.
You should craft a compelling message and value proposition while using the right marketing channels to reach your target audience. You should also update your pricing page on your website to reflect the new, limited-time deals.
When leveraging social media, email marketing, and other channels, your product pages will become increasingly important, especially for e-commerce companies. Ensure your product pages are optimized for conversions by creating a sense of urgency and exclusivity through marketing channels.
Monitor and measure success
You should monitor and measure your business performance whenever you alter your pricing. Discounted prices can negatively impact revenue, profits, and business growth when used too often to generate demand. A promotional price is designed to attract new customers, but you will need more than that to retain them. Instead, you must delight new customers in other ways and offer valuable, quality products.
You should establish key performance indicators (KPIs) for the promotion, such as whether the discounted price increased sales and by how much. Measuring the number of sales, profit from those sales, and increases in the number of customers can help you determine whether a reduced-price strategy was effective in the short term.
Post-promotion evaluation and next steps
Remember, a price promotion can only go so far. While it can help you attract new customers, it can't help you retain them if your products aren't of high enough quality and meet their expectations.
A promotional price isn't meant to last. To encourage repeat business, you must invest in other pricing and marketing strategies to help grow your business.
Mailchimp's suite of marketing tools makes it easy to perform customer research that helps you determine whether promotional pricing is right for your business. Then, you can measure the effectiveness of each promotional strategy against the full-price strategy to determine new ways to build customer loyalty. Implement promotional pricing with Mailchimp today.