CPG Industry News, Field Marketing

The Three R's of Consumer Sales Promotions: Risk Aversion, Reciprocity, and Reward

Businesses attempting to entice customers to purchase their product use a variety of consumer sales promotion techniques. We are all familiar with free samples, coupons, VIP memberships, BOGO sales -- the list goes on and on. However, some consumer sales promotion tactics are more suitable for a particular goal than others.

The type of sales promotion a company utilizes depends on a few factors. In order to determine which promotion technique to use, you must first understand the three R’s of consumer sales promotion: Risk aversion, reciprocity, and reward. Every consumer promotional tactic should promise at least one of these three R’s. Which one should be the focal point of a promotion depends on the product, the end goal of the promotion, and who the target audience is.

 

Risk Aversion

 

Tapping into the buyer’s risk apprehension is one way to develop a successful promotion. The person that purchases a product after tasting it may not have purchased it without trying it first, because they would’ve assumed the risk associated with a product that is new to them. Sampling, demos, and free trials give the consumer a level of familiarity and comfort with a product prior to purchase. Risk aversion-focused promotions work best when targeted at new customers or when releasing a new product.

 

Sampling And Product Demonstrations

Sampling and product demonstrations are two commonplace forms of consumer sales promotion. You often see these promotions take place in grocery stores, where either a store employee or brand representative engages with passing shoppers and promotes a food product. Demos are equally common in shopping centers or outlets. For example, a rep may exhibit the features of a brand’s new vacuum cleaner or offer free five minute massages in their state-of-the-art massage chair.

 

Sampling and demos are most effective when promoting a new product or a product that is foreign in some way to its target audience. A sampling promotion can bring attention to a new product and craft an introductory experience to acclimate customers to it. That way, if they see the product on the shelf in the future, they will be more inclined to purchase it.

When introducing an eccentric product to the market, demos can again be a persuasive promotional tool. Passersby will stop and marvel as brand reps put the product to use and establish its value. Witnessing first hand how your product can solve a problem that your target audience has will make them more inclined to purchase your product. Even if your product can’t solve a current problem, seeing it in action will stick in the consumer’s mind. Should the issue arise for them later on, your product will be the first thing they think of as a solution.

 

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Free Trials

Similarly, free trials allow a customer to get acquainted with a product without the risk of buyer’s remorse. This technique is most useful with a product or service used continuously over an extended period of time.

 

 

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A company that provides potential customers with a free trial is essentially saying to its audience, “we will give you our product for free for a set amount of time, and when that time is up, you won’t be able to imagine your life without it.” Even if the user doesn’t purchase immediately after their trial expires, they will recall the benefit your product provided them and may decide to purchase it at a later date. The more useful the product is for the consumer’s everyday life, the more lasting of an impact its convenience will have on them.

 

Reciprocity

 

The ideal relationship is mutually beneficial, and this is not confined to human-to-human interactions. A relationship between a brand and its consumers can also be advantageous to both parties involved, and certain consumer sales promotion techniques capitalize on this hunger for reciprocity. Special pricing and coupons, loyalty programs, and trade-ins are all examples of consumer sales promotions that provide merit to customers through some form of repayment. These promotions are most successful when geared toward consumers who are already supportive of your brand.

 

 

Special Pricing And Coupons

Buy one, get one. Buy two, get the third free. Buy $10 worth of products, receive $5 off your next purchase. Sound familiar?

These phrases are just a few examples of promotional pricing designed to convince people to fill their shopping carts. Special pricing and coupons are powerful incentives for a few reasons: First of all, they make the consumer feel like they are getting an exclusive offer on something other people pay full price for. Secondly, they can persuade shoppers who don’t want to pass up on a good deal to buy more than they originally planned. Making the consumer feel like they are getting something extra out of a purchase can be enough to sway them towards your product and away from your competition.

 

Loyalty Programs

Loyalty programs are most efficient when they target repeat customers. They aim to provide an incentive or reward for people to buy more products, more often. The rewards provided in a loyalty program may vary. Some programs offer points for every dollar spent that can eventually be redeemed for prizes. Others may offer exclusive giveaways or “members only” sales for loyalty card holders. These programs create a feeling of exclusivity to make the buyer feel like a VIP with a special ‘in’.

 

 

Trade-Ins

Trade in programs entice buyers to upgrade their gear, and they can also be beneficial to the company. They allow consumers to obtain a new product at a lower price, and the business may be able to resell, recycle, or repurpose the older version. This can be especially persuasive when the products being sold are more expensive, and likely would be unaffordable to a target audience otherwise. Catering to this need in your customer base shows buyers that you appreciate their business and would rather them pay less for your product than purchase from a competitor who may not offer the same deal.

 

Rewards

 

A final category of consumer sales promotion techniques involve rewarding a customer for their business. While some of the aforementioned consumer promotion examples do utilize rewards in some capacity, most outwardly require something in return for the customer to qualify for the promotion. Such is not the case with rewards that are seemingly no-strings-attached, like contests or free gift promotions.

These tactics can identify potential customers and establish a brand’s value to a buyer who may have otherwise overlooked it. CPGs with high competition act as a perfect model for rewards promotions because they help a product stand out and give the consumer a clear reason to choose one product over another seemingly identical one.

 

An Instagram user advertises a Burt's Bees Giveaway 

 

Contests

Whether it is an all expense paid getaway or something as simple as a prize basket, people love to win. Contests and sweepstakes create excitement and anticipation, two positive sentiments you want associated with your brand. Tempt customers into your store or to purchase your product by allowing them to enter a contest with little to no purchase necessary.

While this may sound counterintuitive to give something away without asking for much in return, you can generate leads by asking customers for their information such as an email address or telephone number in order to enter. Upon receiving this information, you can automatically opt them in for future promotional emails or texts, such as notifications of sales or promo codes. Keep the promotions relevant to the contest at first to keep your audience intrigued.

 

Free Gifts

Offering free gifts is another great way of showing your customers some love and boosting sales. Companies will often package a free gift in with one of their products to convince a potential buyer to choose their brand over another. Consumers love free stuff, and your product will immediately stand out as more valuable than its competitors if you are providing something the others are not. 

 

Melissa Sonntag

Melissa is a recent graduate of Northeastern University and a content marketing specialist at Repsly, Inc. She is committed to applying her skills in order to bring value to Repsly readers and customers. Outside of work, Melissa enjoys practicing yoga, making music, and anything dog-related.

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