0:00 Let me ask you something. Have you ever put together what you thought was a genuinely great offer? Maybe it was a discount, a bundle, a gift with purchase, something you actually got excited about and then watched it, well, not perform. And your brain immediately went to, okay, clearly the offer was not good enough.

0:21 I need to go bigger. I need to put a bigger discount on. I have to give my customers a better deal. Maybe I should add free shipping on top. And so you go bigger. and it still doesn't move the way that you hoped.

0:33 I see this constantly. Retailers engineering better and better and better offers, stacking more value, shaving more margin, and still not getting the results that they wanted. And almost every time when we sit down and actually pull it apart, the offer was never the problem.

0:50 If that sounds familiar, don't touch your next promotion until you've heard this. Hey there, and welcome to the Bringing Business to Retail podcast. I'm Salena Knight. a retail and e-commerce growth strategist, and if you are looking for solutions and strategies to make your retail or e-commerce store more money, then you, my friend, are in the exact right place.

1:11 So let's get into it. So here's what I find happens with most retailers when they sit down to build a promotion. They start with the offer. They think that what sounds good to a customer, what feels generous, what would they personally respond to if they saw it in their inbox?

1:25 Maybe it's buy one, get one free. Maybe it's 30% off. a free gift with purchase. And look, they can all be great offers. I'm not here to tell you that those offers are wrong. But starting with the offer is actually starting in the middle of the whole process of building a promotional campaign.

1:43 And when you start in the middle, you almost always end up in the wrong place. Because before you decide what the offer is, you need to ask another question first. What is it? Well, what is the outcome that you actually want.

1:57 And I don't just mean... more sales. That is not specific enough. I mean, what does success look like at the end of this promotion? Are you trying to bring new customers in who've never bought from you before?

2:09 Are you trying to get your existing customers to spend more per transaction? Are you trying to move dead stock that has been sitting in that back room for more than six months, taking up space and tying up your cash?

2:21 Because those are three completely different problems and they need three different campaigns to solve them. So if you don't get clear on the outcome first, you end up building an offer that sounds great, but doesn't actually do the job that you want it to do.

2:38 And that is when you find yourself wondering, why aren't customers buying, even though the deal looks good on paper? So let me give you a real example of this, because if you're anything like me, sometimes the theory kind of makes sense.

2:51 But when you give it to me in an actual real life scenario, like what happened with that business, I understand it way much easier. And so I was in a strategy session with a retailer. Let's call her Kelly. So Kelly sells perfume amongst other things.

3:07 And she had a problem. Her hero product for a massive sales event, the one that she had planned her whole promotion around, was stuck on a ship somewhere and it wasn't going to arrive in time for the promotion.

3:21 Now, she had put a lot of effort into this promotion. And so it felt really difficult to... pivot at the last minute. So she needed a backup offer and she needed that backup offer fast. And she came to our session with two ideas.

3:36 So the first option was a bundle where you could buy a 50 mil bottle and get a 10 mil travel size thrown in for free. Option two, buy one 50 mil bottle and get another 50 mil bottle free. Now on the surface, those are two really good options.

3:53 In fact, the option of getting the bigger bottle for free, it feels like it's more exciting, right? Buy one, get one free. Customers love that. It is punchy. It is clear. It feels really generous. And it seems like a no brainer.

4:08 But when we sat down and actually worked through it, when we asked that question, what was the outcome that she wanted from this? Things started to shift a little bit. You see, Kelly's outcome wasn't just to make sales on the day.

4:21 She wanted to bring her existing customers back in and get them spending. and ideally introduce them to a new scent that they hadn't tried before. So she also cared about protecting her brand. Now her perfume isn't a budget product.

4:36 It sits at a certain price point for a reason. And so she didn't want to cheapen that. So buy one, get one free on a full-size bottle. That starts to do some damage to how the brand and the product itself are perceived.

4:50 When you can get two for the price of one, suddenly it feels less like a luxury item and the customers that it tends to attract are the ones who buy once because the deal was unmissable and then they never come back.

5:02 They're always out there shopping for the best deal. Deal seekers, they don't have any loyalty and so they're less likely to come back when there's no deal the next time. That's option two. But what was option one?

5:15 Let's actually do the numbers. Option one was the 50ml bottle that is the main product retails at $55. Her cost on that, wait for it, is just $7. $1.50. I know, right? We would all love to have those kinds of margins on every single product.

5:32 Now the gift, the 10 mil travel size bottle, retails at $22. Her cost, almost as good, it was just $3. And so her total out of pocket for the whole bundle, her cost of goods, the big bottle is $7.50 plus the travel bottle for $3.

5:50 Her total cost is $10.50. But what does the customer see? The customer sees $77 worth of value. The main product at $55 plus the travel bottle at $22. So $77 value for just $55. Now that is a genuinely compelling offer.

6:12 The customer feels like they are getting great value. Kelly is still making amazing money. Her cost of goods on that $55 sale is just $10.50. And here's the part I love. She is putting a product into that customer's hands that they might never have tried otherwise.

6:30 The travel size is a discovery piece. It is a discovery way for people to open up a door to a new fragrance. So the whole conversation shifted the moment she stopped asking, what offer do customers want?

6:47 And she started asking, what do I actually want this promotion to achieve? you what is the simplest offer that can get me there. Now, I want to pause here for a second because what we just walked through with Kelly is actually a framework that you can apply to any offer that you build.

7:04 It goes like this. Before you decide on the offer, you need to get clear on three things. Number one, what is the outcome? Is it new customers? Is it more spend on transaction? Get specific. Number two, what does this offer cost me? Like really, Not just the discount. or the giveaway, but the cost of goods, the packaging, the shipping, the ad spend, know your numbers before you commit.

7:27 And number three, what does this do to my brand long-term? So some offers are going to bring in great customers who come back and others don't. You get to choose which one you're going after. So get those three things clear and the campaign will almost build itself.

7:43 Let me show you another example of this because it's a slightly different version to the same problem. So another retailer that I worked with, I'll call her Trish. Trish sells earrings and she sells those earrings both online and in her physical stores.

7:58 And she had a problem that a lot of retailers know very, very well. Stock that just wasn't moving. Despite the best of intentions, that stock was still sitting on the shelf months later. Specifically, it was a range of earrings that she had been trying to clear.

8:13 The earrings were lovely. There was nothing wrong with them. They just were really slow. to move. And they had been sitting around taking up way too much space for way too long. So she had been marking those down individually from $75 a pair to $55 a pair.

8:30 And she was getting some sales, but honestly, just not quick enough. They were sitting on the shelf for too long and tying up her cashflow. And so we talked through her outcome. What did she actually want to achieve?

8:42 And for her, it was a completely different outcome. She just wanted to clear that stock, Full stop. She was... tired of seeing it. It was taking up space. It was tying up cash. She wasn't trying to bring in new customers.

8:53 She wasn't trying to grow her email list. She just wanted those earrings out the door and the cash in her pocket because that stock cost her more sitting in the warehouse space and tying up money that she could be using elsewhere.

9:06 So once we got that clear, the answer became a lot more obvious. Two pairs for $99. Let me walk you through why that works. At $55 a pair on clearance or on discount, a customer looking at one pair is doing the mental math.

9:22 They're looking at the $55 versus what they normally are priced at at $75. And they might hesitate. They might come back later, which you and I both know, they very rarely come back at all. But when we reframe that as two pairs for $99, that changes the psychology completely when it comes to the buyer.

9:42 Suddenly, it's almost you a pair for free. I mean, we've gone from $75 to $99, all still under $100. The way our brain works, it works in mysterious ways. We will be thinking, it's almost like I get a pair for free, but not quite. That same customer is now thinking, well, I may as well get two because the value is right there.

10:03 It creates urgency. Instead of getting one pair for $77, I get two pairs for $99. Now, that is almost the same price as when she was reducing them to $55. We're now down to $49.50. But remember, at this point, Trish just wants those things gone and she wants the cash in her pocket.

10:22 So customers are now thinking, well, I may as well get two. So that's going to increase your average transaction value. But remember, she wanted to move that stock. So it's going to move it twice as fast because people have to buy two to take up the deal.

10:36 And here's the thing. Trish wasn't precious about making margin on that stock. She just wanted it gone. So the question, was she making enough money per pair? The question was, does this offer get these earrings gone as quick as possible?

10:50 And the answer was yes. Now, that is not a complicated decision. But it is the kind of decision you can only make when you are starting from the outcome. What do I need to happen here? And what is the simplest path to get there?

11:03 Rather than just copying what everyone else is doing. So what is the thread running through both of these stories? Well, both Kelly and Trish came in with the same instinct that most retailers have. Here's the problem. What offer should I run?

11:18 And the answer is, well, you can't know what offer to run until you know what you're running it for. An offer that is perfect for shifting dead stock is going to do real damage to a brand that is trying to hold a premium position.

11:33 An offer that is brilliant for bringing in new customers is going to get expensive and inefficient if what you actually need it to do is increase how much money you make. The offer is not the starting point.

11:45 The outcome is the starting point. And once you flip that, once you start every promotion by writing down in plain language, what success looks like at the end of it, everything becomes easier. The offer, the pricing, the channel, the messaging, it all flows from that one clear answer.

12:03 I know this sounds almost too simple, but I have sat in so many sessions with so many retailers who have spent thousands of dollars on promotions that just never hit their goals. And it wasn't because the offer was bad, but it was because the goal was never clearly defined in the first place.

12:23 Without a clear goal, there is no way to know if the offer is doing its job. Don't let that happen, my friends. Let's make this really practical. Next time you are building a promotion, before you open Canva, before you write the email, before you decide on the discount, sit down and ask these three questions.

12:41 Like physically, write them down. Number one, what is my outcome? What do I want from this next promotion? And don't just say more sales. I want you to be specific. What is the number that you're putting against that?

12:52 is it revenue? Number two, what does this offer actually cost me? I want you to add it up properly. The discount or the giveaway, yes, but also the packaging, the shipping, the ad spend, your time, know the real number before you commit to anything.

13:07 And number three, what kind of customer does this offer attract? And do I actually want more of them? A buy one, get one free offer on a premium product will bring people in, but will they come back without the deal?

13:20 A gift with purchase brings people in. and it puts something new in their hands that they might love and reorder. So think about who shows up, not just whether they show up. So answer those questions honestly and the right offer will be pretty obvious.

13:34 Here's the thing I want you to take away from today. A great offer and the right offer are not always the same thing. A great offer is one that sounds good, it feels generous and it gets attention. The right offer is the one that gets you to the outcome that you want.

13:49 without giving away more than you actually need to, and without attracting customers who were never going to stick around anyway. The retailers who build profitable promotions consistently aren't necessarily the ones with the biggest discounts or the most creative campaigns.

14:05 They're the ones who start with the outcome and work backwards, and then build the simplest possible offer that gets them there. That's it. Start with the outcome.

14:15 Alrighty, my friends, that is a wrap on today's episode. If one thing got you thinking differently about building your promotions, I would love to know it. Come and find me on Instagram. I'm at @thesalenaknight.

14:25 Until the next episode, stay profitable.

14:29 So that's a wrap. I'd love to hear what insight you've gotten from this episode and how you're going to put it into action. If you're a social kind of person, follow me at @TheSalenaKnight and make sure to leave a comment and let me know.

14:43 And if this episode made you think a little bit differently or gave you some inspiration or perhaps gave you the kick that you needed to take action, then please take a couple of minutes to leave me a review on your platform of choice.

14:58 Because the more reviews the show gets, the more independent retail and e-commerce stores just like yours that we can help to scale. And when that happens, it's a win for you, a win for your community and a win for your customers.