Retail 'Hyper' Promotions Offered
By Amy Gilroy -- TWICE, 6/1/2009
Tempe, Ariz. — Promotions that Work is a new marketing company lead by former Rockford manager Rob Wempe that focuses on helping retailers run “hyper” promotions with large prize giveaways for a minimal investment.
The promotions are affordable to both small and large stores, as they are backed by insurance underwriting, said Wempe, who is president of the startup and was formerly national sales manager at Rockford.
For an investment of $600, a small dealer can run a promotion offering a $10,000 shopping spree at his store, promoted via email, he claims.
“The traditional types of advertising you did in the past, you can't use that alone. You need to drive business,” he added.
Marketing director for Promotions that Work is Bob Graham, former owner of Breakers Mobile Electronics.
Pacific Stereo, a three-store chain in Riverside, Calif., ran a promotion in May through Promotions that Work offering a $10,000 cash prize, resulting in increased business of 30 percent over the four-day period, said Wempe.
Under this promotion, each shopper who attended the sale entered a five-digit number into a computer for a chance to win. The odds are high enough that the insurance to cover the promotion is affordable, said Wempe, claiming the entire promotion cost $4,500, although suppliers helped defray some of the costs and Pacific sold an extra $30,000 in merchandise over the four-day period.
Wempe said retailers are often too overtaxed to execute even low-cost promotions. “My take on this is that most retailers are so busy running their businesses, you can teach them about the promotions, but they don't have the time to do it.” He said he oversees a promotion from start to finish.
Wempe began using insurance-backed promotions as a buyer at BrandsMart in Kansas City about 10 years ago.
At the time, the chain ran two sales a year, but the sales were losing their effectiveness. It was in 1997 and large-screen TV sales were lagging as consumers waited for HDTV. He learned of underwriter SCA Promotions. “I did a promotion where we said if the Chiefs shut out the Chargers on Sunday, for all purchases over $399 for four days before the game, we'll refund your money. It cost about $22,000 but we did $450,000 in business in a [long] weekend that would normally do $120,000.” The Kansas City Chiefs did shut out the San Diego Chargers and BrandsMart refunded its customers their money, but it did not cost the store any more than if no customer won the prize, said Wempe.
Other “conditional rebate” sales can be based on the amount of snowfall on a given day. Retailers may hold a “birthday sale” designed to bring in new customers. Wempe's company obtains a list of local individuals in the retailer's target market (say, 18 to 24 year olds) who are having a birthday in the next few months. They are invited to come to the store for a chance to win a new car. The customer enters his name and address when he arrives at the store. Promotions that Work then automatically generates bounce-back emails to the customer. “It drives your prime demographics into the store,” said Wempe.
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