Would you invest 20 percent of the retail price of your product in a promotion, even before you pay the cost of advertising the event? Most of you would say, “No way!”
Funny, though, many of you do — in the form of 20 percent discounts, especially at that all-important holiday time of year.
If you offer a 20 percent discount, you have done just that. And what does it get you? Do people come streaming into your store by the droves for that 20 percent? No? Well, maybe you should consider the alternative that Bonnie Frey of Harris Jeweler in Troy, OH, did last year and will again in 2012.
Bonnie calls it her “Hi Tech Holiday.” She offers clients a free Kindle for any purchase between $500 and $1,500. A $1,500 to $2,500 buy gets you a free flat-screen TV, and any purchase over $2,500 gets you a free iPad.
How does it work? Last year Bonnie gave away 80 Kindles, 60 TVs and 62 iPads. (Each gift with purchase, by the way, is engraved with the Harris Jeweler name and logo. They’ll never forget where they got it.) Holy smoke! At nearly $500 each, that’s $30K in iPads alone! You can get a deal on TVs, but at about $80 apiece, boy, Bonnie had huge dollars in her gift inventory alone.
Then, to promote the event she secured several billboards and ran large-format, full color print ads. Geesh! How can she afford to do that?
Well, she can afford it because of the results she got. Even if you consider minimums, 80 Kindles means at least 80 purchases of $500 each or $40,000; 60 TVs generated a minimum of $90,000; and the iPads, well, they were worth an absolute minimum of $155,000. That’s nearly $300,000 in sales if you only consider the minimum dollar amounts people had to spend. And you know she did better than that by far. But there’s more!
Bonnie didn’t have to discount her products a dime. So the investment she made in the free gift inventory is a bit misleading. She eliminated haggling, and she eliminated all returns. That saves time and money after Christmas.
There are other elements to the promotion, of course, and Bonnie’s promotion is now licensable by other jewelers who want to run it exactly her way. But here is one more secret to success in this promotion. Most jewelers try to compete with the big boxes and other retailers on Black Friday, and might consider doing something like this for a day or a weekend. Bonnie ran her promotion right up until Christmas Eve.
“But wait,” you’re thinking. “Good as this sounds, I can’t afford to spend $50,000 or more to lay in that kind of free gift inventory.”
Perhaps not. But you can scale your promotion. Purchase, for example, 20 Kindles and five or 10 each of the TVs and iPads. Then, as sales roll in and product rolls out the door, replenish your supplies.
But beyond that, the principle is this: Instead of discounting, add value. Your offers will be more compelling and you’ll have the results to show for it. Remember, if you’re not making offers that you would respond to yourself, don’t expect your prospects to.
On the other hand, when you create the right offers, your advertising will be more successful in bringing in the business, and you’ll enjoy a “Hi Check Holiday.”