Top KPI’s to focus while measuring the effectiveness of a promotion campaign

By December 8, 2018 February 18th, 2019 No Comments
, Top KPI’s to focus while measuring the effectiveness of a promotion campaign

In-store promotions are one of the most effective ways to increase your sales, but only if you know how to determine the effects of product promotion on your company in a promotion analysis.  At the end of the day, data helps you to provide insight, as it will tell you where you’ve been, where you’re heading, and where you want to be

Here are the main metrics you should use to analyze data on the success of your in-store promotion

  • Profit

Promotions, which are nothing but investments, work by earning turnover with less investment. It is important to evaluate the impact of sales promotions on profit because it is possible for promotions to lead to higher sales but lower profits.

  • Sales Volume

To accurately measure the increase in sales volume, you need to know your baseline (sales without promotion) using both data you’ve already collected and data you collect throughout the duration of the promotion.

This equation can be used to find your overall increase in sales:

Overall Lift = Promoted Product Sales lift + Halo – Cannibalization – Forward Buy

Promoted Product Sales Lift – There are multiple ways to calculate lift in Product Sales but in simple language – It is the difference between volume when Product was not Promoted and volume when Product is Promoted.

Halo – This is nothing but encouraging to buy other product with promoted Product. So how can we get to know such Products – Simple by using basket analysis e.g While drinking Pepsi we would love if we have Snacks with us. Find all basket from Historical Promoted Period data which contain Promoted Product and find such a product which has not promoted but present in most of the basket.

Cannibalization – Performance/ volume of product is decreasing due to promotion of other product of the same category (Can be found out on brand level). Find out historic promotions of the product and see its effect on Category and competing for product of the same category. Promotion may lift the sale but at the category level sale may get dropped as well due to Cannibalization. e.g If Dove Soap has 50% off why would I choose Lux Soap.

Forward Buy – Retailer buys a large volume of Promoted Products than usual volume and would not buy in regular frequency until they are out of stock. How to find – If the retailer baseline is less than regular baseline after promotion period then there may have chances retailer has stocked up (Forward Buy) the product. This would not only affect to Product sale but also Category sale

  • Customer Satisfaction

Customer satisfaction is an important thing to customer loyalty and long-term brand switching, so it is important that you measure customer satisfaction by collecting data to measure exactly how satisfied customers were with your discounted promotion and with your overall product quality. Few points to check customer satisfaction: Was there any out of stocks situation? Did people comment about your brand or product online? For deeper insight, try inviting your customers to fill out a quick survey or use a hashtag with the promo to tell you what they think of your brand. Using the information you gather, you’ll be able to hear the truth of what customers thought of your promotion.

Nilesh Narkhede

Nilesh Narkhede

Senior Consultant leading Admin Workbench module for SpendO. Having expertise in web technologies like Java, Spring, and Angular with 8 years of industrial experience. Find out more about me on LinkedIn

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