Promotion analysis can reveal some surprising insights about customer behaviour and preferences.
Did you know a promotion aimed at driving sales of a specific product may actually end up boosting sales of a related product instead?
For instance, a grocery retailer could run a promotion on fresh salmon with the goal of increasing sales of the fish and then discover after promotion analysis that customers who bought salmon were also more likely to purchase items such as asparagus and wine.
By adjusting the promotion to include discounts on these related products, the retailer can increase overall sales and profitability.
Therefore, it’s important to understand customer behaviour and preferences when designing promotions, as well as the value of promotion analysis in uncovering hidden opportunities for growth.
With AI-driven analytics, a retailer like yourself can gain even deeper insights into customer behaviour and preferences, leading to even more effective promotions and better business outcomes.
Let’s discuss some of the key lessons you can learn from promotion analysis, as well as the role that AI-driven analytics plays in enhancing this analysis.
Let’s start by understanding what promotion analysis is.
What is promotional analysis?
Promotion (or “promotional”) analysis is the activity of determining how effective a retailer’s promotions are at achieving their goals of:
- Increasing sales
- Brand awareness
- Customer engagement
Engaging in promotional analysis provides outcomes that would be significant to you.
Why is promotion analysis important?
Promotion analysis is important because it’s an essential tool for measuring the effectiveness of your promotions.
When you take a closer look at your promotional activities, you can see which ones are working and which ones aren’t.
So, when you engage in promotion analysis you can:
1. Measure ROI
By tracking promotional data, sales data, and customer behaviour, you can figure out which promotions are driving the most sales and engagement, and which ones aren’t worth the investment.
This helps you measure the return on investment of their promotional activities, and determine which promotions are actually making them money and which ones are just costing them.
2. Optimize promotions
Promotion analysis also allows you to optimize your promotions. By focusing on the activities that are most effective, you can maximize sales and engagement. This means you can figure out which promotions are working well and adjust their strategy accordingly, ensuring that you’re not wasting time or money on activities that aren’t effective.
3. Increase customer loyalty
Promotion analysis helps you create promotions that your customers actually want. By understanding customer behaviour and preferences, you can tailor your promotions to your target audience, which can lead to increased loyalty and engagement. This means that customers are more likely to continue shopping with you, and may even become advocates for the brand.
So, the question is, what do you need in order to engage in effective promotion analysis?
Let’s take a look at some promotion analysis lessons you can apply that will grow your business.
Promotion analysis lessons you can use
Lesson 1: Define your objectives
The first step in effective promotion analysis is to define clear objectives for each promotion. This may include:
- Increasing sales
- Clearing inventory
- Attracting new customers
- Boosting foot traffic
By defining objectives upfront, you can better measure the success of your promotions and identify areas for improvement.
Lesson 2: Use and analyze promotional data
Promotional data is any information related to the various marketing promotions and sales events that you may offer to customers, such as data on the:
- Type of promotion
- Products or categories involved
Of course, you’ll need to analyze all of this promotional data to make sense of it and further inform your decisions.
Modern technology, such as AI-driven analytics is a tool you can use to gain insights into how various promotions are performing; and then use those insights to make data-driven decisions.
AI-driven analytics allows you to:
You can look at the sales and revenue generated during a specific promotion to the sales and revenue generated during a different promotion or during the same time period in the previous year.
See your top-performing promotions
Promotions drive the most sales and revenue will be revealed because advanced analytics can analyze the performance of products right down to the SKU level relevant to your sales and promotion history.
By analyzing your historical data with AI-driven analytics you’ll be able to tell which promotions are likely to be most successful with your customers and which products or categories are most likely to be popular during those promotions. You can also easily run “what-if” scenarios and predict how potential future promotions might perform.
Lesson 3: Understand your customer base
Understanding your customer base is critical to designing effective promotions. By analyzing customer data, you can identify key segments and preferences, which can inform promotion design and targeting.
AI-driven analytics can be especially helpful in this regard, as it identifies patterns and trends not immediately apparent to human analysts, so you can better target and personalize your promotions to appeal to your customer base.
Lesson 4: Test and learn
Testing promotions before rolling them out at scale is another essential part of effective promotion analysis. By testing promotions with smaller groups of customers, retailers can identify what works and what doesn’t before investing significant resources into a larger campaign.
You can run the test through an AI-driven analytics promotion software solution first, so it provides you with precise insights based on customer behaviour data.
Lesson 5: Monitor and adjust
Ongoing monitoring of promotion performance is critical to identifying opportunities for improvement and making adjustments in real time. Key metrics to track include sales, margin, ROI, and customer engagement.
And because advanced analytics can give you real-time insights, you can find out how promotions are performing at any given moment and make adjustments to the promotion if you need to.
By monitoring promotion performance regularly, you can make adjustments to improve their overall effectiveness over time.
Maximize your business potential with promotion analysis
Effective promotion analysis can grow your business when done well.
It’s an essential tool for leading retailers like you looking to drive better business outcomes through promotions.
By applying lessons like:
- Defining clear objectives
- Analyzing promotional data
- Understanding your customer base
- Promotion testing
- Promotion monitoring
You can drive more sales and revenue, and provide a better shopping experience for our customers.