Implementing Promo Codes and Discounts to Increase Sales in an Auto Store
You decided to open your own business: you selected a niche, found suppliers, created an enterprise and a team, and opened a store. The next stage is increasing profits.
We have prepared material that will discuss the tools to achieve this goal. Specifically, let’s consider the introduction of
promo codes and discounts in an auto store. One note: today we are not talking about online promotion, but about trading in a regular retail store, outside the Internet. Ready? Let's take your business to a new level.
1. What are the advantages and disadvantages?
2. What are the benefits of discounts?
3. Application for low-liquidity goods.
4. When discounts should not be made.
5. Types of promotions in the store.
6. Conclusion.
An auto supply store falls into the highly competitive category of stores. This implies that the demand for such goods is also not small. But what should you do to make customers frequent your store and not the neighboring one? To achieve this, you need to carry out certain manipulations with your business, one of which is holding promotions and introducing a system of various incentives for visitors.
1. What are the Advantages and Disadvantages
Implementing promotions and discounts is not a groundbreaking concept. It is a strategy used by almost everyone aiming to stay competitive in a market saturated with offers. However, it is still worth utilizing because everyone is attracted to some form of benefit, which means you need to provide it to them.
The Advantages of This Method of Increasing Sales
Before focusing on a system of discounts, you need to determine whether it is profitable to introduce them into your business. At first glance, it may seem that this process does not require special knowledge or effort. However, it is crucial to understand that there are nuances in any aspect of business. To grasp these nuances better, let’s first consider the most common motivations for sellers to introduce deliberate price reductions.
If salespeople are asked what goal they aim to achieve by offering discounts, the expected answers are:
- They are provided by everyone without exception: Buyers are not interested in products unless there are special offers for them.
- To persuade hesitant customers: If a client is thinking about purchasing a product, the most effective and simple way to persuade them is to provide some kind of bonus.
- To attract new customers in a competitive market: Prices and product categories on the market are approximately the same, so to attract new customers, concessions must be made.
Why Are Discounts Needed?
Any marketer will tell you that one of the main successful components of sales is a sale. It might seem that by lowering the price of a service or product, the seller will receive a lower profit. But in reality, this is not the case! All kinds of sales and promotions can significantly increase the income received from your own auto store.
2. What are the Benefits of Discounts?
According to centuries-old experience of entrepreneurs, it is more profitable to sell more of a product at a lower price than a smaller quantity at a higher price.
For example, if the purchase price of a set of combined wrenches is $500, it is better to sell 10 sets for $700 each than 3 sets for $1000 each. The arithmetic is simple. We won’t delve into aspects like saving effort and money on selling goods with a larger margin or increasing brand awareness by distributing more items. These are separate topics. Let's return to our main discussion.
Sometimes, incentives, bonuses, and concessions are simply profitable ways to dispose of certain products, such as:
- Remaining stock from long-purchased products
- Seasonal goods at the end of the season
- Additional Benefits:
- Freeing up Warehouse Space: This allows you to receive new products without increasing storage costs.
- Returning Invested Money: The longer a product is stored, the harder it becomes to sell.
What if your store’s assortment includes highly liquid products? By briefly reducing the price, you attract people’s attention, increase product turnover, and potentially reduce the purchase price. Increasing the sales market often leads suppliers to offer better cooperation terms.
You should never fear price cuts. A thoughtful approach and proper sales planning can make discounts a means of additional growth for the auto shop.
If you own an auto shop, service station, gas service, or car wash, you will benefit from implementing promotions and discounts on auto products.
Implementing Discounts Successfully
Now that we've established the relevance of discounts for our business, the next question is: how to increase sales without going into the red? The answer lies in meticulously analyzing each stage of product sales, from procurement to final sale.
Analyze each step:
- Purchase Price: At what price is the product bought for which the discount will be applied?
- Profit Margin: How much profit will be received from it?
- Delivery Costs: How much does it cost to deliver the product to your store?
- Operational Costs: What will it cost for store employees to work?
- Traffic and Conversion Rate: What is the customer traffic and conversion rate in your store?
Next, let's consider the undesirable issue of low-liquidity goods.
3. Application of Discounts for Low-Market Goods
Low-liquidity goods are products that are not in demand due to various factors, such as:
- Release of a New Model or Similar Product: Customers may prefer the latest version, leaving older models unsold.
- New Product on the Market: If a product is new and hasn't gained consumer trust yet, it may not sell well.
- Incorrect Brand Choice: The chosen brand might not appeal to the target market.
When items don’t sell, the store incurs losses from various costs, including utility bills, storage rent, security, maintaining retail outlets, salaries for sellers, and advertising expenses.
Stress Discount
In such cases, a stress discount can be beneficial. A stress discount is provided to sell off illiquid inventories or to liquidate certain retail outlets. Its primary goal is not to increase overall sales but to offload specific items, sometimes without any markup and potentially even at a loss, to recoup at least some money.
4. When Discounts Should Not Be Made
Discounts and promotions can benefit any business, but there are instances when they should not be used:
- Low Competition: When there is little competition, discounts should be replaced by expanding the range of products and supplementing them with customer loyalty support programs.
- Initially Inflated Prices: If the cost of the product was initially inflated, setting the regular price under the guise of a discount is not advisable. Buyers are usually aware of market prices. After analyzing the market, they will realize this is not a discount but a manipulation, which will not give you any advantage over competitors and could damage the image of your auto shop.
- Stale, Outdated, or Defective Products: No one will buy outdated or defective products for their car, even at a low price. Vehicles are high-risk items, and customers are unlikely to risk installing a defective part. In this case, you will not be able to sell even a single unit, much less an entire batch.
- Suspicion-Inducing Discounts: Discounts on the full range of products can cause suspicion among buyers. Such discounts are usually seen only when a company is being liquidated or restructured. Buyers will need additional explanations for the unexpectedly low prices.
- Frequent Price Reductions: Constantly reducing prices for the same product will lead customers to wait for the next promotion instead of buying at the regular price.
- Insignificant Discounts: Small discounts do not attract customers. A 15% discount is considered optimal for retail trade. Anything below that may not add significant value to the client. However, this applies to retail goods, and the situation may vary in other business models.
The key consideration is ensuring that your promotions and discounts effectively reach and resonate with your target audience.
5. Types of Promotions in the Store
A discount, along with other tools that stimulate demand for products, is often part of a promotion. Let's consider the main types for retail (retail trade):
Types of Promotions for Businesses to Use
- Waiting Time: On a pre-designated day and time, the store offers a discount on a certain product. The date is usually announced in advance.
- Incentives for Certain Categories of Buyers: These promotions are targeted at specific audience segments, such as owners of a particular car brand.
- Personal Discounts: Formed by analyzing the purchase history of a particular buyer, and the information is sent to them via phone or email.
- Reward for High Volume Purchases: Special offers for customers who spend a certain amount in the store, either one-time or over time. Customers receive a significant discount on their next order or a bonus card.
- Related Products – Cross Sell: Although cross-sell and upsell are not types of promotions but methods to increase the average check, they are useful and popular. This technique increases sales by enhancing customer loyalty and increasing the average check amount. For instance, when selling a car vacuum cleaner, offer an interior cleaner as well.
- Upsell: A sales method designed to convince customers to purchase a more expensive, advanced, or premium version of a selected product.
- Beautiful Price Tags and Labels: These attract buyers' attention to new models. Promotional products should be marked with bright stickers or price tags. Labels like “last item” create a sense of urgency. Additional labels could include: “This product was purchased # times in the past week,” “Special offer,” “Take it now, it won't be there later.”
- Matter of Chance: Promotions with lottery elements can be perceived positively. For example, when making a purchase, a discount of varying size (5% to 50%) may be stamped on the receipt.
- Limited Offer: Products available in limited quantities can create a sense of urgency. If you have good traffic, a sign indicating limited stock (e.g., only 10 items left) can attract buyers.
- Sets and Kits: This model increases the average check by offering related products as a bundle. For example, a car shampoo and bitumen stain remover bundle might cost less than purchasing each item individually.
- Exchange: Customers can exchange an old product (like a compressor or jack) for a new one with an additional payment, typically 10-30% lower than the cost of the new equipment.
This is just part of the list of marketing promotions in retail chains. To improve results, it is better to combine tools, constantly analyzing the reactions of customers and the needs of the target audience.
Now you know what types of discounts and promotions exist and how you can take advantage of them. All that remains is to choose the most suitable ones and implement them in your own auto shop. Constantly analyze which promotions are most effective for your business. Don’t forget to inform customers in advance about each promotion or discount! Read the blog from Discountler, become our partner, and increase sales with us!
6. Conclusion
Now you know what types of discounts and promotions exist and how you can take advantage of them. All that remains is to choose the most suitable ones and implement them in your own auto shop. Constantly analyze which promotions are most effective for your business. Don’t forget to inform customers in advance about each promotion or discount! Read the blog from Romax Group, become our partner, and increase sales with us!
