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 the sales of a product. However, in order to unleash the true potential of a promotional event, you need to be cognizant of the effects of product promotion and the factors responsible for those effects. We have listed the major metrics that you should consider while analyzing data to measure the success of your in-store promotion.

Profit
Promotions, which are nothing but investments, work by earning turnover with less investment. It is critical to evaluate the impact of sales promotions on profit because there is a possibility that promotions may lead to increasing sales with decreasing profits.

Sales Volume
You need to calculate your baseline (sales without promotion) by analyzing the product’s pre-promotion sales data and the data collected during the promotion to accurately measure the increase in sales volume.

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 the product was not promoted and volume when the product is promoted.
• Halo — This is nothing but encouraging to buy other products with promoted products. 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 was present in most of the basket.
• Cannibalization — The performance/volume of products is decreasing due to the promotion of other products in the same category (Can be found out on the brand level). Find out historic promotions of the product and see its effect on Category and competing for a product of the same category. Promotion may lift the sale, but at the category level, the sale may as well drop due to Cannibalization. e.g If Dove Soap has 50% off why should 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. If the retailer baseline is less than regular baseline after the promotion period then there may be chances that the retailer has stocked up (Forward Buy) the product. This would not only affect the product sale but also the category sale.

Customer Satisfaction
Customer satisfaction is one of the pivotal factors contributing to customer loyalty and long-term brand switching. The degree of satisfaction brought along by the overall product quality, and the convenience and affordability offered by the promotional campaign will provide you with the overall customer satisfaction. A 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.

To understand how to implement these KPIs and draw meaningful insights from the promotions data, visit us at https://www.spendo.ai