Well hello there! Catherine Langman here with you on the Productpreneur Success Podcast! Welcome to the show if you’re a new listener, and welcome back if you’re a long-time listener!
As we approach the end of financial year, you may be considering running a clearance sale or flash sale (affectionately known as an EOFYS).
There’s the temptation to reduce how much you need to count during your stock-take.
And of course, to get a few quick sales over the line before having to pay the tax man.
This year I think many consumers are holding off to make non-urgent purchases until the EOFY sales start, because so many of us are having to pull our belts in a bit in terms of personal spending.
So if you’ve been weathering a period of low sales revenue, I would encourage you to run a sale at this time of year.
Even though your profit margins are lower during discount sales, there are many benefits to running an end of financial year sale aside from an increase in revenue :
- You can sell off any end of season stock or inventory hanging around from last season.
- You can clear slow-selling lines or odd or less popular sizes.
- Encourage new customers to trial your products for the first time by retargeting people who have visited specific product pages in your online store.
- Or you can reward existing loyal customers or re-engage lapsed customers who haven’t bought from you in a while.
So in today’s episode, I’ll share with you some of the common pitfalls and mistakes, as well as best practices for running an EOFYS.
The number one pitfall I see with eCommerce store owners running flash sales is that they run them too frequently.
The outcome of this is that you train customers not to shop with you at full price. They learn to wait because they know another discount will be just around the corner.
The other outcome of this is you lower your profitability. Your profit margins are much lower on sale items, and if you’re offering frequent discounts this will impact your bottom line.
Additionally, by running a deep discount sale strategy too frequently, you also run the risk of attracting people who are discount-hungry and not necessarily your ‘ideal customer’.
Now, discount customers are one of four common buyer types that we will all have within our audience – the others being your ‘I want what’s new’ buyer, your high AOV buyer, and your lapsed customer.
So because the discount customer is a common buyer profile, and because most of us will usually have times when we need to clear off old stock or odds and ends, it is worth catering to this customer type occasionally.
Just don’t make it 100% of your marketing plan, which is a consideration many people don’t think about, but I see it happen quite a lot so you always need to make sure you’re targeting the right audience and build in a plan to on-sell full-priced products to these customers.
There are five common mistakes I see with clearance sales, so make sure you’re prepared for these.
- Slow or delayed shipping.
Do not sell ‘pre-orders’ with a long lead-time during a flash sale or end of financial year clearance sale. This can absolutely be a temptation if you are in a position where you’re trying to raise some capital to fund things like big stock purchases or tax bills. But during a very busy end of financial year promotion period is not the time to run a pre-order promotion.
- Not enough stock.
Don’t promote your most popular products as the incentive for your clearance sale, especially if you know you only have a couple of items left. Your most popular products will keep selling at full price after a promotion like this ends, so you don’t want to shoot yourself in the foot by leaving yourself nothing to sell after the EOFYS ends.
- Site crash.
If you’re expecting a large influx of website traffic during your sale, make sure you have the bandwidth to cope with it! Although this doesn’t really happen with platforms like Shopify, so if you’re on this favourite platform of ours then you’ll be golden.
- Not doing enough marketing – both paid and organic – and actually under-performing in the promotion. We’ll discuss some of the reasons for this later on.
- Not running the EOFY sale at the expected time of year.
Running it later with the expectation you’ll face cheaper advertising and less competition is counter-intuitive because customers are out shopping when they know the sales will be on. If you leave this till later, you run the risk that your customers have spent their money elsewhere!
So, after all the pitfalls and mistakes, should you still run an end of financial year sale? YES! If you do it well, you’ll gain new revenue and customers in the short and long-term.
- Decide on your objective.
Are you targeting existing customers or attracting new customers?
If you’re targeting existing customers, you want to promote the sale to your email list and retarget your email list using Facebook ads.
Ideally, you would segment your email list into lapsed customers (those who haven’t bought in a while), loyal customers (your besties!), and those on your list who have never bought before. Then, tailor the messaging of your sale to suit each of those groups.
If you’re targeting a new audience, you don’t really want to promote the sale to your existing list. Unless you can segment those on your list who have not yet bought yet.
Then you’d promote the sale to a cold audience via your Facebook lookalike audiences, excluding those who’ve purchased from you before.
Also try and decide on some revenue targets for this promotion. I have a promotional planning training bundle that helps you to figure this stuff out as well as the marketing requirements to help you achieve those revenue goals.
If you’re interested in checking this out, I’ll link to it in the podcast shownotes, or you can head to Productpreneuracademy.com/short-courses and look for the Product Launch and Promotional Campaign Planning Bundle.
- What products are you selling in the sale?
You don’t have to put everything on sale. You may choose to sell off end of season stock, or last season’s stock, or odd sizes you have in popular lines. Or, you may choose to put your entire range on sale.
You can also put discount bundles together to try and increase your AOV and appeal to the subset of your customers who are likely to be higher AOV buyer types.
BUT, I don’t advise launching a new range or putting brand new products on sale during a clearance. This results in cheapening your brand and training your customers to wait for a sale before they buy anything.
- Choose your incentive
Usually a flat discount is going to work the best during an EOFYS. This is because it’s the simplest to offer and you can set it up on your website to run without needing a coupon code, which will reduce the friction to purchase and help you to increase your sales conversions.
Typically with incentives, the more steps people have to go through to get the deal, such as spend this much to qualify and then use this discount, it just becomes confusing and difficult for many customers to figure out and you’ll lose buyers in the process.
Sometimes it can pay to layer incentives if you really want to go hard and convert as many as possible. You might consider giving a free shipping coupon to your loyal customers who are also subscribers to your email and / or sms lists so they can have an extra benefit as a reward for being a loyal customer.
- When, where and how will you sell it?
This sort of promotion should not be run in a “fly by the seat of your pants” fashion!
So make sure you set your clearance sale start and end dates before you begin.
If you’re only offering the sale to an exclusive audience (such as your email list), you may need to set up coupon codes required to redeem the offer on your website.
If you’re promoting the sale to everyone, then just use the ‘sale pricing’ function on your website. (It can be a great conversion tactic to show your full RRP crossed out and then a nice red discount price next to it!)
Schedule your emails and paid ads to run. I always like to include a minimum of 3 emails a week in a promotion like this, with email re-sends to non-opens on a different day and time. The follow-up emails tend to convert way more orders than a stand-alone email can produce, so don’t be a nervous nelly at this time of year thinking you’ll be bothering your subscribers by sending too many emails. If you do that you’ll only lose out to your competitors whose emails are at the top of the inbox at the right time!
I like to send out emails to the most engaged subscribers and loyal customers first – to give them the VIP treatment so they get first access to the promotion. This can be perceived very positively by customers, as we all know that the most popular sizes and styles sell out fast!
This is also the time of year and type of promotion to use SMS marketing as well. SMS marketing is not something you want to use with every single email you send to your audience – that would be annoying to the receivers – but if used judiciously, it is a medium that enjoys way higher open rates, click through and conversion rates. Again I would be going out to your most engaged subscribers and loyal customers first with your SMS, sending one at the beginning of the promotion and one towards the end.
With Facebook and Instagram ads – you want to run this promotion at top of funnel and middle of funnel. That means, to your cold audiences and to your warm audiences.
Try and take learnings from your previous best performing audiences and ad creatives so that you can give yourself the best chance of hitting the mark with these ads.
I typically don’t exclude past buyers from the middle of funnel in this campaign, because it’s the kind of promotion that customers are likely to come back and buy again even if they’ve bought recently.
You definitely want to schedule these in advance to make sure the ads pass the review and approval process on time and you don’t miss out on any deliverability during your promotional period.
Keep monitoring and tracking your ad results daily and increase the spend on profitable campaigns by 20% every 48 hours, to give yourself the best chance of maximising your revenue results.
I would also highly highly recommend getting on Instagram and Facebook Live and sharing stories and reels to your followers several times during the promotion period. Partly because these content formats are getting the most reach organically right now, but additionally if you make the effort to share this kind of organic content you will be rewarded with cheaper ad spend on your paid content as well. The reason for this is because you are essentially feeding the algorithm with more data points that help the platform to optimise your ads more efficiently.
You can also run google ads during this kind of promotion, adjusting the titles in your ads and even your product feed so that it’s clear there is a great discount promotion to take advantage of.
That’s it for today’s episode. I hope this has given you some insight and inspiration around how you can plan and execute a successful End of Financial Year Sale.
And if you want to find the training bundle for just $197, head to http://www.productpreneuracademy.com/short-courses
Or, if you’re keen for some help with this stuff, please just give us a shout! Whether you’re looking for coaching to help you to learn and implement these things, or if you’re looking for a team of experts to outsource to, just head over to http://www.productpreneurmarketing.com and you can book in for a free strategy session with us.
View the show notes for this episode and links to listen or watch here.