Every five to six weeks, mobile jobbers everywhere receive brochures for the upcoming promotional period. This event is either preceded or shortly followed up by a district manager meeting, which in the current climate is likely a Zoom event. At this event hopefully your DM is providing you not only with product information, but also some presentation ideas to help sell these products.
The items highlighted in these brochures are the very same items the company, whose name is on the side of your truck, wants you to push during this promotional period. You’ll also receive brochures from the major WDs with their upcoming promotional products. In most cases you’ll receive a discount of 12 to 15 percent on those items, and maybe even some extended dating terms on what’s what’s being pushed this month.
The products presented on these promotional brochures are normally a mix of tried-and-true sellers with some new-to-market offerings Maybe it’s something you already have too many of in your inventory. Maybe it’s what we in the business refer to as a “dog”. We all have heard the old saying that if you put lipstick on a pig it is still at pig. Well the same goes for putting a discount on a dog; it is still a dog! Beware.
Let’s take a financial look at promotions and see if they are worth it and if so, how to make them pay off for you.
Your major brand name has a 10-piece screwdriver set that has a list price of $225.00. If it is a 40 percent margin item for you, your normal cost is $135.00. Your gross profit (GP) if sold at list is $90, and your gross margin (GM) is the 40 percent.
If the upcoming promotion offers you a twelve percent discount, your new cost would be $118.80. And if you sell the set at list price you will now make $105.20. This jumps your GM up to 47.2 percent; this is an 18 percent GM improvement or $16.20. Now, this sounds all well and good, but what if you discount the product to your technician customers.
By discounting the $225 set by 12 percent your new selling price is $198.00. This is a good selling price, since you’re now below the desirable $200 price point.
With your purchase price discount of 12 percent your new cost is $118.80 and if your sell is $198.00 you’re still earning a GM of 40 percent but your GP dollars are only $79.80. So if you pass the discount along to your customers this promotion will cost you $10.20 for every set you sell.
If you usually sell one screwdriver set per week at $225 in a normal 5-week period you would gross $1,125.00 and earn a GP of $450. If during this same 5-week period you sell your normal 5 sets, plus 3 additional sets at $198, you would gross $1,584.00 and earn a GP of $638.40. That’s a nice $188.40 bump in GP during that period!
However, if you look at it another way you can really make this promotion a winner for you.
We all know that you can go to The Home Depot and buy a pretty nice screwdriver set for $45-$50. So if you have a technician who’s going to pay $198 for a great screwdriver set, that person will most likely pay the $225 – especially if you tote the note for 5-6 weeks. Therefore, if you buy the sets at the discounted $118.80 cost and put the extra margin dollars in your pocket, you’ll now make $106.20 per set or a GM of 47 percent.
Selling at a discount feels good and is a music to customers’ ears, but putting the extra $16.20 per set in your pocket sounds best. This is especially true if the customer would have bought at the normal list price anyway.
Additionally, make darn sure you only stock up heavily on products that you know you can really move. Otherwise, you may end up with your money tied up in some pigs with lipstick riding around in the back of your truck.
In addition to promotions sponsored by your suppliers there are self-funded or self-developed promotions that you cook up yourself.
First you need to decide and document exactly what your proposed promotion is going to accomplish: new customers? Increased sales revenue? Unload some dead inventory? I’ve heard some jobbers say their promotion is to create excitement and goodwill with their customers, or just to be different. Really? The objective of any promo is to sell more stuff. If you sell more, you will excite yourself and create goodwill in your wallet.
With hunting season in full swing I’m sure some readers in rural territories are sponsoring a shotgun or archery promo right now. Usually the promotion awards customers a number of tickets according to each purchase they make toward winning an item of some sort: possibly a gun or a bow.
When the promo is over one of your customers is the winner of the grand prize, and everyone else is disappointed. If you have 300 customers who participated, you now have one happy customer and 299 disappointed ones. Also I will bet you really didn’t sell any extra merchandise because you were giving a chance to win a gun or bow.
These home-grown promotions can be a good way for you to move some of your overstock or slow-moving products.
Some promotions can be long-lasting, such as 5 percent off for cold hard cash. Since you will not have to pay a credit card fee or self-finance the sale, the discount for cash in your hand is a win-win.
Add-on sale promotions are good revenue builders and also are good closing tools.
· “If you buy the 10-piece screwdriver assortment I will discount the nutdrivers set by (insert percent discount amount here) so you are all set with great matching tools”
Promotions do serve a purpose and can be valuable to both you and your customers. Here are some ideas to think about:
· Develop a new customer promotion that’s only available to someone who maybe has not purchased from you or hasn’t purchased anything in a long time. A 10 to 15 percent discount on a $200 purchase to get them on your books is a good start. Since you’re not selling anything to this person right now, a little discount won’t hurt you and may just get you a new customer.
· How about a special promo only for those who you communicate with online? If they reply to your email, they get a special price.
· Another good promo idea is to offer your own deal on whatever the competition has on special this month. This may get some sales your competitor would have gotten and will give you the satisfaction of bugging your competitor, which is always fun
· I’m always skeptical of BOGOs (buy one, get one free events). If your normal cost for a product is $10.00 and with the promotion you buy one and get one free your normal cost would have been $20.00. So now if you are getting two units for $10.00 that’s a 50 percent discount! This tells me that either someone is making a huge profit on this product and you can buy it for less elsewhere, or this product is potentially a dog
When you stock up on a promotional product you know you need to move that item quickly. Therefore, it gets your enthusiastic selling-time attention, and it is a fact that enthusiasm for a product increases sales.
Here's a great quote from the salesman's salesman Zig Ziglar:
“For every sale you miss because you're too enthusiastic, you will miss a hundred because you're not enthusiastic enough.”
Now go sell something.
