Understanding the Differences Between Sales and Promotions

As you are working through the marketing must-haves in your planning process, you may encounter the need to plan sales and promotions. While sales and promotions are two terms that are often used interchangeably, they are not the same thing. They are both tactics that aim to increase sales, but they differ in their approach and execution. In this blog post, we'll explore the differences between sales and promotions and how they can benefit your business.

Benefits of a Sale

A sale typically involves offering a temporary discount on a product or service to incentivize customers to make a purchase. This could take the form of coupons, buy-one-get-one-free offers, percentage-off discounts, etc. The goal of a sale is to encourage customers to buy now rather than wait, and to create a sense of urgency around the purchase. Nearly 60% of shoppers say they are more likely to buy a product if it's on sale. This indicates that sales can be an effective way to incentivize purchases and drive revenue for e-commerce businesses. (BigCommerce, 30 Ecommerce Conversion Rate Optimization Steps to Help Boost Sales)

Benefits of Promotions

Use promotions to attract attention to your brand name, or a company, attract new customers, create hype around the new product lines. Not only promotions can push stock by offering extra value, but they also work best when planned ahead, supported with marketing collateral like flyers and social media hype created ahead of time. Your social media manager will be happy to have information about promotions planned in the beginning of the year so she can design the brand content around them. Your operations department will be happy to know ahead of time about the needed stock for certain SKUs and they will look for the best deals and make sure there is warehouse space available. Your salespeople will be excited to communicate the upcoming promotions to their customers ahead of time to keep them interested. Your marketing department will be able to design and print needed collateral without rushing and with the best rates. If you budget the promotion into the strategy, your results will not surprise/disappoint you, and the achieved (great) results can be maintained by the combined efforts of all departments.

Sales vs Promotions: Which is Better?

Sales are typically time-bound and are intended to create a sense of urgency among customers to make a purchase. By offering discounts or other incentives, businesses can encourage customers to buy products or services that they may not have considered otherwise.

The purpose of a sale is not only to increase revenue but also to improve the cash flow and inventory management of a business. A successful sale can help a business get rid of excess or slow-moving inventory, which frees up space and resources for new products. Sales aim to get rid of excess stock, attract attention, and drive sales in a short period. They are a temporary marketing tactic that can help businesses generate revenue, improve cash flow, and manage inventory effectively. By carefully planning and executing a sale, businesses can achieve their objectives and build customer loyalty.

While sales can be a great way to increase revenue and attract new customers, there are some potential drawbacks to using them too often or for too long:

Diminished brand value: If a business relies too heavily on sales and discounts, customers may begin to view the products or services as lower quality or less valuable. This can damage the overall brand image and make it difficult to maintain loyal customers.

Decreased profit margins: Offering frequent sales and discounts can eat into profit margins, especially if the discounts are too steep or if sales are too long. This can make it difficult for a business to maintain profitability in the long term.

Customer expectation: When businesses offer frequent sales, customers may begin to expect them and may hold off on making purchases until a sale is available. This can lead to a decrease in overall sales and revenue.

Reduced urgency: If sales are too long or too frequent, customers may not feel a sense of urgency to make a purchase. This can result in fewer sales during the sale period and may make it harder to create excitement around future sales.

It is the “fear of missing out” that makes the sales work. If the same offer is always available, the conversion rate will drastically diminish. Work on designing more values for your customers, other than discounts. Consider personal approaches, long term relationships, diversification to the products that your customers want, customer service, packaging, expert advise, etc. to create the value that customers will keep in mind, return to and even recommend.

Promotions are a marketing tactic that serves the purpose of creating excitement and urgency around a product or service to drive sales. Use promotions to tie-in to your company’s overall brand objectives.

Promotions can take many forms, such as offering discounts, coupons, contests, giveaways, and other incentives. A promotion aims to offer customers something extra to encourage them to buy, thereby increasing sales.

The purpose of a promotion is not only to boost sales but also to create brand awareness and attract new customers. By promoting a product or service through a contest or giveaway, businesses can generate buzz and get people talking about their brand. Promotions can also attract new customers who may not have considered the business otherwise.

Promotions are more effective when planned ahead as part of the overall marketing strategy, as they require more time and resources to execute successfully. Sales, on the other hand, can be a reactive strategy in response to changes in stock levels or other factors that may impact revenue.

When integrating promotions into a marketing plan, consider the timing of the promotion. One way to do this is to tie the promotion to seasonal events, such as back-to-school or holiday shopping periods. By doing so, you can take advantage of the increased consumer spending during these periods.

Another approach is to align the promotion with significant events or activities that your target audience may be interested in, such as sporting events, concerts, or festivals. This can help generate excitement around the promotion and attract more attention from your target audience.

In addition, it's essential to keep up-to-date with trends and holidays that may be relevant to your target audience. For example, if you're targeting a younger demographic, you may want to consider incorporating promotions into summer vacation or back-to-college campaigns.

By planning ahead, businesses can effectively manage stock, warehouse space, employee schedules, and promotional materials for their promotions. This helps to reduce the stress and pressure of last-minute decisions, resulting in a more effective and enjoyable promotional project. By setting Key Performance Indicators (KPIs), such as sales figures or lead generation, businesses can measure the success of their promotions and use the data as a benchmark for future events.

However, the most critical aspect of promotional activities is the follow-up strategy. It's essential to determine how to retain the leads generated from the promotion to ensure future company growth. By planning ahead and setting in place an after-sale approach, businesses can maximize the benefits of their promotional activities and drive long-term success.

Sales and promotions are two different marketing tactics that can help businesses achieve different sales goals. Sales are used to convert customers, while promotions are designed to create excitement and urgency and attract new customers and establish relationships with them. Understand the differences to be able to develop an effective marketing plan that meets your goals and targets.

Another important aspect: make sure you have the goals and targets!