The Secret's Out: Private Sales Spur Big Returns

By Susan Weitzer On Apr 19 2004 - 6:00am




Private sales are an in-store promotional event communicated by a direct-mail piece. They are by invitation only and typically last for one day. They are launched with a direct-mail campaign to a highly targeted group of prospective buyers and/or a dealer's customer list. Prospects/customers are invited to a timed sale event via a personalized letter, note card or postcard.

Private sales are a powerful promotional tool because they generate significant revenue, turn prospects into customers, increase customer loyalty and assist retailers in creating and maintaining a customer database.

Specifically, they generate increased revenue, not just on the day of the sale, but also from pre-sales and post-sales. They're also completely measurable, since you know what kind of traffic it produced, what your close ratio was, what your average ticket was and precisely how much you made during the event. What's more, private sales compliment and supplement your traditional advertising through increased store awareness.

Utilizing direct mail to announce your private sale has certain advantages over other marketing media. For one thing, direct mail is targeted — it is delivered to those prospects who are your best potential customers.

Direct mail also virtually guarantees 100 percent penetration of the market, assuring that your letter will get in the hands of everyone you target. And despite popular belief, most people do look at their direct mail. In fact, United States Postal Service research indicates that 80 percent of direct mail is looked at or read.

Perhaps most important, direct mail is a more cost-effective method of targeting prospects than newspapers and/or television. Many newspapers are decreasing circulation and increasing rates, while with over 100 television channels from which to choose, it is difficult — if not expensive — to reach your target audience via video.

Thanks to human behavior and buying psychology, attendees at private sales events tend to buy and buy big. That's because the limited time of the sale instills a sense of urgency in your customers, motivating them to buy now, and the private aspect of the sale makes those attending feel special and encourages buying. Taken together, all of these elements increase a dealer's close ratio and average ticket, so that the sale easily pays for itself while generating substantial returns.

How substantial? You can estimate your potential return on investment by multiplying total revenue (response rate multiplied by close ratio multiplied by average ticket) by margin to get your net revenue, subtract the cost of the sale to derive your profit, and then divide the profit by the cost of sale to determine your return on investment.

Another important reason for running regular prospect private sales is their ability to bring new customers into your store. Many CE retailers hesitate to hold prospect-only events because of the low response rate. But in our constantly moving society, it is crucial for retailers to bring in new customers and private sale promotions with their targeting ability, and do that extremely well.

From our 13 years in this niche direct-mail technique, we know that private sales, when executed correctly, are an extremely effective and profitable in-store promotion. But learn more — talk to your buying group associates or your dealer friend in the next town, or try a private sale and realize for yourself both the short- and long-term success this targeted strategy can provide.







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