P3M7 Special Offers & Special Promotions

With all the focus on the big picture and how the entire business is positioned in modules 1 to 6 of Pillar 3, it is easy to forget that customers don’t buy the business.

They buy individual products or services – or what professional marketers call offerings.

If you go into a supermarket wanting to buy cans of baked beans, you may have a preference for Heinz but at 57p per can, the supermarket’s own brand looks good at 35p and what about the Branston beans offer of 8 tins for £2 – that’s only 25p each and reduced from 52p!

Customer preferences can move based on special offers that change the relative value for money offered.

Quite simply, any business is made up of a series of offers – all help to set and define the overall positioning.

Sometimes for good and sometimes for bad.

Before my illness I had a weakness for Pringles potato crisps sold in a resealable tube. The normal retail price when I was buying was about £1.50 but they were frequently discounted and I was trained to pay between 70p and £1 and couldn’t bring myself to buy at full price… I knew I could get them cheaper at another supermarket or I had a strong expectation I could in the next few weeks.

Using the example of expensive cars again, each Ferrari model helps to define the brand and refine the positioning. Each is consistent with the high price, desirable sports car. Think Ferrari and you get a clear image in your mind of the type of car.

But look at how Porsche has changed.

For many years, its image was based on different versions of one car – the 911 – a fast, traditional, practical sports car at a realistic price. Since then, it has moved down-market with the Boxster and Cayman. They may be fine sports cars but they are much cheaper than the 911.

Porsche also extended its range into SUVs with the Cayenne and into a four door sports saloon with the Panamera. Now when you hear the brand Porsche, the image is more confused. Still much more expensive than the average car but it might be a small and nifty coupe but it might not be.

What Is An Offer

There are two elements to an offer – the basic and the perceptions – this is the steak and the sizzle.

You need a strong basic offer which delivers the promised benefits and is seen by the customer as good value for money before and after purchase.

To make the sale, you also need to use the sizzle to get the customer excited and this is the salesmanship.

Think back to the times when you’ve had to be talked into doing things but you’ve been very glad that you were.

My Mum is a good cook and if she asks me if I want a cake I’ll say No, but then when she brings it out and I see it and smell it, I always seem to be reaching for the second piece before I know it. It’s the same cake I turned down so easily at first which has become irresistible.

The elements of the two parts of the offer are:

  • Basic
    • What the customer gets for his or her money
    • The tangible product or service
    • The expected benefits & experience
  • Perceptions
    • How you present, position and package your promotion
      • Describe it well
      • Take away risk
      • Give extra value

A Strong Offer Can Overcome Bad Copy

A quote from legendary copywriter Gary Halbert shows just how important the offer is in the overall marketing communication.

“Strong copy will not overcome a weak offer – but in many cases, a strong offer will succeed in spite of weak copy written by a marketing moron! Also what you have to say is enormously more important than how you say it.”

If you want to read the tips from this master copywriter on how to put together your offer based on building up from the features and facts of the product, moving to the benefits and finally the offer, see this letter from the Gary Halbert Letters.

Your Strongest Offer

  • Make your strongest offer from the start to test “expected winners”
  • Easier to raise prices than to keep reducing to find a price that works
  • Explain a low price by making it clear this is a market test or a trial.
  • Set a higher price reference point. Normally $4.95 but $2.95 for first two weeks

Gary Halbert was adamant that you should start with your strongest offer and test it because you are looking for expected winners.

If your best offer doesn’t sell, then you have nowhere else to go but at least you have saved yourself time and money that would have been wasted on testing lesser offers.

However if you test your best offer at the start and find it is a winner, then you can start reducing benefits and increasing prices in future tests so your margins are improved.

Let’s look at an example.

Sell product A + Bonus B for $29.97 – sells well at 20% conversion

Sell product A + Bonus B for $49.97 – sells with a 10% conversion – note this is not as many sales but when you do your contribution numbers, it may be more profitable.

Sell product A for $29.97 – sells with a 15% conversion

Sell product A for $49.97 – sells with a 4% conversion

Testing from a winner gives you freedom to see what else works but if you test from too high a position, you’re left scrambling to find an offer which does work.

It also rewards your customers who take early and prompt action. Success becomes a reason to raise prices and can in itself be used as a powerful reason to “knock people off the fence”.

Even though I encourage pricing low at the start, I recommend you use your intended sales price as a reference. It helps to establish a high value for what you offer.

Create Urgency

Your offer needs to be strong enough to get your prospects to act right now. Having them think “I might do that sometime” is not enough.

You can do that by creating urgency which creates a fear of missing out on the deal if action is delayed.

  • Limited time – main item or bonus – only available until the end of the month
  • Limited quantity – main item or bonus – limited edition “only 500 of these will ever be sold”
  • Beware of false scarcity so explain your reasons why to avoid making potential customers suspicious. Internet marketing is notorious for trying to create scarcity for digital products when everyone knows that thousands can be delivered without any extra cost or effort.You can say “only 500 people will be able to buy this PDF” but it isn’t believable unless you give a strong reason why. Explaining that only 25 people will be allowed into a group coaching program because you want to give everyone personal attention is believable and credible and explains why numbers are limited in a way that makes sense to the buyer.
  • Impending price increase – one of my preferred methods of creating scarcity is through a future price increase. It doesn’t limit you on how many you sell and it encourages you to think about increasing your prices and margins.This is how retail sales work.You see something you like but you think it’s expensive, then it’s reduced in the three week sale and you know at the end, either the price is going back up or the product is going to be dropped. It’s a simple choice – buy now or miss out.

Make It Easy To Buy

  • Low involvement impulse buys
  • Free sample – experience the benefits
  • $1 trial purchase (collects payment details)
  • Free for 7 or 30 days
  • Easy payments
  • Guarantees

No business will want to make it difficult for customers to buy but it happens all too often that an imaginary (but highly effective) sales prevention department works hard to do exactly that.

Think back on your own experiences when you wanted to buy but you got frustrated and never completed the purchase. The same kind of things may be happening in your business.

Things that immediately spring to mind that have stopped me buying are:

  • Overwhelming choice – buying becomes a bigger decision than can be justified from the pain it solves or the gain it creates.
  • Untrained and ill-informed sales staff – you want guidance buy you’re met with ” I don’t know’s”
  • Pricing that doesn’t make sense and creates doubt in your mind.

This easy to buy factor is especially important in what are known in marketing as “low involvement purchases” or “impulse buys”.

You see something, you want it, the price is low enough for you to decide to go ahead with little or no thought. That chocolate bar at the supermarket checkout you slip into your trolley at the last minute or the yummy freshly baked cupcake from your favourite coffee bar are examples but we make impulse buys to settle short terms desires that extend beyond physical hunger.

What’s the easiest thing to try?

Something for free

No money is needed and therefore no sacrifice is made for other purchase intentions. Few of us have unlimited spending power so buying A often means not buying B. You want a new jacket and shoes but your budget means that you can’t have both to the standard you want and the decision slows down the buying process since you have to weigh up competing desires.

But when something is free, there is no compromise. It is easy to say Yes.

And low involvement purchasing relies on Attention, Trial and Repurchase.

FREE is just about the biggest attention getting word there is in copywriting.

We all love a bargain – and especially “something for nothing” so it is very easy to move into the critical stage of trial.

That’s when you get the chance to see if you like it.

  • Does the product or service meet or exceed your expectations?
  • How does the value you get compare to the price you will be asked to pay in future?

If your experience is good and it seems value for money, you are likely to want to repeat your consumption and that means buying.

You’ll see the free tasters used in supermarkets to encourage customers to try something new. Many people who try – and even like it – won’t buy but some will and of those, some will become regular buyers of the product. All the advertising, sales promotion tactics and recommendations can’t beat the customer trying and liking a product.

You’ll also see the free sample used in services.

I and many other coaches and consultants offer a free initial consultation because we recognise it is a very effective way to establish our credibility and let potential clients sample the quality of the advice. It’s also used in cross promotions between different businesses (more about this in my section of joint ventures).

If you own a hair dressing salon then you have customers who care about their appearance so you can cross promote a tanning salon, a gym or slimming club by handing out free trial vouchers to your customers when they have their hair done. The other businesses in the cross promotion do the same, giving a chance to try your services for free.

The $1 Trial Purchase

This isn’t as attractive as free to potential buyers for several reasons but it has some big advantages.

Some people are non-buyers for what you sell. I see some people on the Internet say that they see no reason to buy information products because everything can be found on the web.

Maybe, maybe not.

Those people make no allowance for the costs of their time and the frustration of wading through the chaff to find the wheat.

Paying one dollar or a similar nominal amount helps to qualify buyers into those who are at least prepared to consider spending money.

However it makes the transaction more time consuming. The money is irrelevant but the time it takes to stand in line in a store to pay or to work through the Internet payment processing system may put some potential customers off. The worst to lose are those who are time pressed at the time they see your offer but are definitely interested.

Out of sight, out of mind applies so it’s important to find ways to get their eyes back on the offer when time is less constrained by repeating it.

Paying a dollar to buy turns a prospect into a customer so a $1 trial can help you to build an impressive sounding customer list quickly and establish extra credibility in your other marketing.

Perhaps most importantly, if the $1 trial is part of a continuity program, it captures the payment details from the customer, proves that they work and allows future payments to be collected automatically.

Imagine that you own fitness and dance studio. You offer a low cost first session as part of a 12 week program.

As a standalone transaction, you need the happy customer to come back and confirm that he or she wants to continue and you have the obligation to follow up to make sure you close the sale, risking delays and the dreaded “Let me think about it”.

In continuity, you make it clear that the first session is just $1 but in signing up, there is a commitment for the other eleven sessions and payments will be made automatically but it can be cancelled at any time if that’s what the buyer chooses.

Here the emphasis is very different.

In the first example, you get the money if the buyer says a second Yes after you’ve asked for commitment.

In the second, you get the money until the buyer says No.

This type of continuity can seem controversial and it has been abused on the Internet with hidden continuity. I’ve signed up to receive a low cost offer only to find that hidden in the small print is a forced continuity for a monthly service or newsletter and money was being charged from my credit card to pay for a service I didn’t value r want.

I should take this opportunity to remind you that your paid membership of Your Profit Club is a continuity program which will automatically renew unless you cancel it. Hopefully you won’t because I’m committed to giving you value and you lock in your initial purchase price while newer members have to pay a higher price as the content expands and is continually updated with new best practices.

Does that make continuity a hard sell?

It shouldn’t because of the convenience it gives to the buyer.

My third party pet insurance is sold on the basis that cover will continue unless I cancel it. The price is small and I’m happy to keep rolling over the policy rather than going back into the insurance market and looking for new quotes and filling in more forms. It also means that I am secure in the knowledge that the cover is in place if something terrible happens.

Imagine how inconvenient it would be if things you wanted to continue stopped when the money ran out and you needed to take action to renew each time.  For example if you decide to take an important customer to your golf club for lunch and a round of golf and when you turn up, you’re told your membership expired two weeks ago and you hadn’t returned your membership form and cheque. How embarrassing!

Free For 7 or 30 Days

This is a combination of the first two methods making the initial “Yes I’ll give it a try” decision easier but backed up with collecting payment details to process future payments if the continuity program isn’t cancelled.

Easy Payments

Some of your customers can afford to buy your products or services and pay the full price in one go.

Many will appreciate some kind of instalment plan to help spread the cost.

Depending on what you sell, you may be able to finance this out of your own business or need to arrange financing. As a general rule, selling products requires third part financing because the suppliers/vendors need to be paid before you’ve collected the cash from customers. For services, it may be easier to finance since your costs will be more evenly spread across the period.

The third party financing may be providing a credit card facility so customers can load up their cards and pay when they have the cash or you may need to arrange lease and hire purchase facilities through your bank for bigger items like furniture, equipment and cars.

You can even sell easy payments as a big customer benefit that makes a huge positive impact on your cash flow and bank balance.

First, if customers are paying you monthly, then your cash receipts are much more regular and predictable which helps with cash control and forecasting.

Secondly, you may be able to get payment earlier than you normally would.

A great example of this is small business accountancy and the changes that regular payments made when they became common.

When I trained, fees paid were based on an agreed estimate adjusted for time actually needed to process the client’s accounts and tax work which would vary. This meant that the client wasn’t sure how much the accountancy bill was going to be and became nervous of asking for any additional help, even when it was badly needed.

The accountancy firm also had a problem. Suppose a new client has just started trading in January and has a year end of 31 December. Most of the work would be done the following year with corporation tax returns in the UK due 9 months after the year end, the client’s affairs may not be finished until September and the invoice paid in November or December. That’s nearly two years after becoming a  client.

This created a huge financing problem for the accountants of what they call “lockup” – the value of work done and not yet paid for – which had an irony as they were supposed to be the finance experts.

To fix these two problems, accountants have moved to fixed price billing (usually subject to conditions) and monthly payments for an ongoing service.

Now a new client starts in January, has a fixed price agreed and starts paying immediately, spreading payments out and making it easier to budget for what can be a large cost. The client now has the ability to ring up and get advice when anything happens safe in the knowledge that no extra costs will be incurred.

The accountant has cash in the bank much faster and a closer relationship with the client which allows for the opportunity of selling special services like tax planning if there has been a particularly good year, meaning the client can keep more of the profits generated out of the hands of the taxman.

It’s a win-win situation by being prepared to break out of the traditional “that’s the way we do things” and may be a lesson you can apply in your own business. Remember what I’ve written before about Tunnel Vision versus Funnel Vision.

If easy payments are the norm in your business but you are short of cash and need extra financing, you can sell your services ahead of time by offering a pay now for 10 months and get two extra months free provided you are confident your business will still be round to deliver on your promises. Cash rich customers may have a preference for the discount and cost saving rather than the gradual payments with interest rates so low.


I talk much more about guarantees in Pillar 6 but your customers need reassurance that they are making the right decision at the time of buying.

A credible opportunity to get their money back if they are not happy after buying gives that reassurance and the absence of a guarantee can trigger warning messages in their minds at the wrong time.

Special Promotions

  • Stock clearance
  • Scratch & dent
  • Ordered too much
  • Pre-launch trial – I need testimonials
  • Customer appreciation – thank you
  • Money for the taxman
  • Special events – birthday, Christmas, Valentine’s Day, Thanksgiving

As buyers, when we see a special offer and especially a really super offer, there is a danger that we can become suspicious.

Is it too good to be true? Could this be a scam?

This is why it’s important to give customers a reason why you are making the special promotion offer.

Going back 25 years retail stores in the UK used to have two big stock clearance sales each year – in January and July – driven by the need in fashion to clear space and financing for the autumn/winter and spring/summer new collections. These sales still exist but many retailers seem to have a continuous or near continuous sale.

Another reason to discount heavily is when you build up a scratched and dent stock of products that are fit for purpose but aren’t good enough to sell at the full premium price. You may have seen information marketers use this to sell off damaged stocks or customer returns but you can also see in with Factory Shops for pottery and crystal. Eagle-eyed quality inspectors have spotted a minor flaw which to most of us is invisible and doesn’t impact on the use of the product.

Sometimes you’ll see businesses admit that they got their purchasing wrong because they ordered too much. Perhaps sales weren’t as high as expected or perhaps there was some kind of clerical error. Either way, the business is giving a clear reason why – “I have a problem and I’m ready to offer you a great deal to help me get around it.”

Other times you’ll see a low price limited quantity special promotion come through for a new product because the customer wants to get customer feedback and testimonials before a bigger launch. Early adapters can find it irresistible to benefit from having exposure to the new product ahead of the main customer base and at a low price.

Alternatively you can have a special promotion as a customer appreciation event so you say thank you to selected or all customers. This may be “order as usual at a special price” or it can be tied into a special event where you can wine and dine customers and give your best buyers a chance to buy something new or special. This works well where there is an irrational passion about buying found in collectors.

For example, imagine you own a ladies shoe shop and you have 50 or 100 customers who buy many more shoes than average. You can invite these people to a closed event at the store where you showcase the new collections and give an extra discount for purchases on the night.

Sometimes the event which causes the promotion may be external to the business. One I see in information marketing is money for the taxman which goes along the lines of…

“We’ve just had a super year and had an enormous bill from the taxman after we’ve invested more than $200,000 in developing groundbreaking new products or services (or I’ve just paid cash for my new villa in Spain). To help us raise the money to pay the tax without having to go to the bank and borrow, I want to make you a very special one time offer…”

Other reasons to promote (or celebrate) can be tied into special events like birthdays (yours or if you have the information systems to do it your customers’ birthdays and anniversaries) and regular events like Christmas, Valentine’s day, Easter and Thanksgiving. You are just looking for a reason to make a special offer promotion which is relevant to the customer and/or your product and makes sense.

Promotional Offers

  • Lower prices
  • 25% off, 50% off
  • Discount coupons – say 20% or £10
  • More goods
  • 2 for 1, 3 for 2
  • 2 for £10
  • Bonuses – buy cosmetics, get free perfume,
  • New – a little bit of excitement

So what is your special offer?

It’s easy to just think in terms of price discounts and they are certainly common but we know from Pillar 1 and looking at the effect of pricing, lowering prices can have a huge impact on profit which can make it difficult for extra volume to compensate.

Special offers therefore need to be focused on making incremental sales which you wouldn’t get normally rather than cannibalising expected sales to regular customers. They are great for introducing products your customers don’t normally buy or for genuinely creating additional sales of what they do buy.

For example, a theatre which has on average 50% of seats sold may identify its best customers who go 6 to 10 times a year paying £50 each time with each customer worth £300 to £500. Offering a season ticket for up to 20 shows (based on availability) for a fixed price of £700 (paid in one go or spread over the year) may be very attractive to people who would like to go out more. It also helps sales of the extras like drinks and ice creams which are often very profitable and creates more urgency for people to book up since occupancy rates will shoot up.

If you are discounting, then  big numbers make much more of an impact than small.

It’s tough to get excited about 10% price savings which is why many sales start at around the 25% level. Buyer motivation grows as the discount level increases towards 50% or more but it requires very high normal margins to be able to sell at those discount levels and still be very profitable.

This can lead to inflated list prices. I used to be a director in a business selling to electrical wholesalers and our net discounts were 75% to 80% and our best products still had contribution margins over 50% so it doesn’t just happen in the fashion and furniture industries.

An alternative to an immediate price reduction is a coupon off the next purchase within a specified time limit. It’s not as immediately attractive as a big money off promotion but it does help lock in those extra sales which may not otherwise happen. WH Smith uses this policy in the UK but as a customer I find its implementation flawed although they should have tested the options.

Their vouchers are usually time limited starting from next week and running for 7 days. So if I buy in one department, I receive a voucher for another purchase. If I was planning to go to another department and buy something else, I now have a reason to delay purchase until next week. And next week I may be in a different town centre or forgotten the voucher.

Best of all offers is more goods rather than a lower price which is why 2 for 1 and 3 for 2 deals are so common and especially for perishable goods that have to be consumed quickly rather than bought for stock.

These look and feel like a price reduction offer to the customer but in a 2 for 1 the customer is paying the same as normal and in a 3 for 2, the customer may have been persuaded to pay twice as much as normal.

The extra cost is in providing the extra product so again these offers work best when margins are high.

A quick numbers example on a biscuit offer which may tempt you in the supermarket.

Normal selling price £1.00

Cost price £0.40

Normal margin £0.60

A 50% discount will slash the selling price down to £0.50 and cut margin down to just 10p while a 33% discount will reduce price to £0.67 and margin down to 27p.

A 2 for 1 offer will keep sales at £1.00 but costs will go up to 80p as you have to provide double the quantity giving 20p margin.

In contrast a 3 for 2 offer will increase sales to £2.00, increase costs to £1.20 and increase margins to 80p.

In this simple example, the 3 for 2 will suit regular purchases better – and especially if they have to be consumed quickly – since it increases profit compared to buying one while the 2 for 1 offer suits occasional purchases which the customer wouldn’t normally buy and won’t make substitutes between products.

You do need to understand your numbers to have confidence in your offer and be willing to test and closely monitor it to make sure what you expect to happen really does. This goes back to the three ways to increase contribution – more customers, more transactions or higher value per transaction.

A similar concept is the 2 for £10 offer which you can see in stores for products like books, CDs and videos. These are profitable because the offer is strong enough to encourage customers to buy extra.

Another way to make your offer special is to leave prices the same but to throw in a bonus or premium which is connected to the buyer or the product. You can see these in cosmetics sales with offers like “Spend £100 and receive this free vanity case”.

These gifts work well for products you know you should have but don’t really want to buy.

In the UK, life assurance for 50 to 80 year olds to pay for funeral expenses and leave a little extra for the family is promoted heavily with free gifts. I was looking at an advertisement the other day which offered the gift of a nice pen for enquiring and a free portable TV (or similar) for those who sign up.

Airmiles works in a similar way and emphasises the advantage of crossing the business/personal divide. A senior business executive may make many flights in a year for work but use the air miles to whisk his wife and family away on a low cost holiday. That perk creates strong brand loyalty to the airline.

For Your Profit Club, it may have been the big name bonuses which knocked you off the fence and helped you to decide to buy your membership. As these are digital, these have the big extra advantage in that there is little or no extra cost involved in supplying them to more members.

You can do the same by partnering up with other businesses who are interested in serving your customers and persuading them to do the free trial deal I mentioned early in this module. Remember I talked about the hairdresser offering free tanning sessions. While it’s an introduction for the other business, you would have a bonus you can put a financial value to – “Free tanning session worth $20 for every new customer who has a hair wash, cut and blow dry in July.”

One of the big reasons for running special promotions is to give you or your sales staff something new to talk about when keeping in contact with customers. Many businesses fail to maintain regular contact because they assume their existing customers already know everything about the company and they have nothing fresh or interesting to say. Promotions of the month give you the excuse to contact the customers, check on their satisfaction levels and ask for referrals.

What To Do Next

I’ve shared a lot of information about special offers and promotions to help you to find the ways to get your customers motivated to take action and buy more.

Here’s what I recommend you do:

  1. Pay more attention to the special promotions you see – what appeals and doesn’t appeal? What seems to get others excited?
  2. Decide on your promotion – when will it start and finish (how will you create urgency), who will it be for (best customers, new customers), what will it be for (a standard product or individually chosen to get them to try something new), your reason why to give your offer credibility and the structure of your offer in terms of price cuts, extra goods or bonuses.
  3. Check the financial logic – make sure you understand how this will make you money. Then double check the numbers and test where it could go wrong. Remember it’s much better to lose money on paper than in the real world.
  4. Review your offer against your overall positioning. As a chartered accountant, even though I don’t trade as one, I wouldn’t use the unexpectedly big tax bill as an excuse for a special promotion because it casts doubt on my financial acumen. It would be damaging to my positioning although I’m happy to admit I know next to nothing about tax and never advise on it – definitely an area for the specialists.
  5. Decide how you will communicate the offer in terms of your message and the marketing media you are using. Write out your copy and plenty for a series of marketing messages rather than a one hit and hope effort which depends too much on timing.
  6. Brief and train your staff – you don’t want potential customers asking about the special offer and being asked by your team “what offer?” Secure your customer service and supplies if you expect it to be very successful. You don’t want to disappoint your customers now you have them interested.
  7. Test your offer and monitor the results very carefully – is it attracting interest and if not why not? Is it the message or its the offer itself not attractive enough to motivate buyers? Is it producing the results you were expecting or is there some unexpected consequence?
  8. Roll it out to all your customers when you are happy with the promotion but keep monitoring closely. Things can quickly change and competitors may react if they notice and feel the effects.
  9. Work on your next offer.

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