Before You Discount Or Run A Contest – YOU NEED TO READ THIS!

There are a variety of methods that serve as key indicators for a successful marketing or advertising campaign. Certain tactics positively skew the results which will encourage you to keep using them, but they are not sustainable ways for businesses to maintain revenue growth. To help you avoid these marketing blunders, we’ve outlined the 4 advertising strategies we see businesses use most often that WON'T sustainably increase your business’s revenue in the long run.

Winner, Winner Chicken Dinner!

A contest is one of the first things that comes to mind when a business owner is thinking of ways to increase traffic and sales. While a contest can create many positives if successfully executed, though they do have some downsides when it comes to sustainable revenue growth. You must consider how time-consuming it is to run a contest from inception to the winner announcement, generating the rules, choosing the appropriate audience and making it appealing enough to incentivise participation. Additionally, contests may only boost revenue temporarily, where you could have a high participation rate among new customers but a low retention rate afterwards, and if contests are your primary tactic, you should consider how often you want to run contests and how the frequency will affect the overall quality of the contests. If you’re like most business owners, time is a precious commodity and the benefits, such as increased sales or brand awareness, if any, may not outweigh the time you put in to make it a success. You also might find that the people your contest attracts are frequent contest players (yes, that’s a thing) who aren’t your target audience and you’re not likely to see them again until the next contest begins.

There’s No Better Feeling than FREE…

FREE stuff! Who wouldn’t want that right? While free giveaways may be an exciting idea, you should be wary when considering using this tactic. The products you’re giving away for free come at a cost that you won’t necessarily recuperate, even if it is offset by the added sales that may potentially occur when people collect their freebie. Another thing to keep in mind is that if there is an unanticipated demand of the free items, and your supply runs dry quickly, it will negatively affect your brand image and reputation ¬¬¬- Think of Target’s empty shelves when they opened in Canada. Giveaways can be a great tactic to temporarily boost sales, but you cannot give things away for free forever. It will not only lower your profitability in the long run because you’ll need to purchase the products you’re giving away, but you are also degrading the perceived value of your products, giving them away for free. Also if you are continually using free giveaways, it will lose its effectiveness becoming the norm for your customers, decreasing the excitement factor, which will eventually will no longer exist.


A discount can be tricky to decide. Go too steep and your margins will be negatively affected, offsetting the boost in sales, while an insignificant discount won’t have much effect at all on your sales as it won’t be enough to entice shoppers. If you’re going to discount, run the numbers and find an optimal discount rate. Because discounts are such a common tactic used in retail, there may be that stigma that your selling last season’s merchandise, or depending on how often you are discounting you might be training your customers to shop only when you have the discount running. Additionally, your customers may also start to wonder why the product isn’t at this price all the time, which waters down the perceived value of your products or services. Remember that while it may give you a short-term boost in your sales, long term this tactic may have unforeseen consequences which could eventually affect your sales model just like it did retail giants like Michael Kors & Kate Spade from opening discount outlet stores.


The bundle deal that increases transaction size and inventory turnover, what’s so bad about that? The largest factor that attracts business owners to buy one, get one deals is the volume increase, but it’s easy to become addicted to the larger transactions and BOGO the wrong merchandise or even be tempted to BOGO more products than they should. Another downside is that when your customer’s double their order, their next purchase will be further down the road as their need is reduced, so it will increase your sales in the short-term, but reduces the frequency of which your customer returns, lowering your revenue stream down the road as well as affecting your anticipated cash flow. We also often find in fashion retail specifically that BOGO deals though they are exciting to talk about in your advertising aren’t huge drivers of sales for many brands. While each tactic is appealing, there are many things to consider before launching contests, free giveaways, discounts or BOGO’s. If you have any questions about how you can sustainably boost your revenue streams without a bag of discounting tricks, don’t hesitate to give us a call at 705-252-4180. We are always happy to help you streamline your advertising and marketing to garner, real, tangible results.

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Barrie, ON   L4N 9P6

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