Promotional Risk Management – Dummies Guide!
- Oct 20, 2019
- By Karen
- In Uncategorized
- Comments Off on Promotional Risk Management – Dummies Guide!
If you want a really mahoosively big bang for your buck, then look no further.
Promotional Risk Management allows your company to launch high impact marketing promotions at a fixed cost.
Promotions that excite your audience
Have you ever wondered how smaller brands in your market place can afford to engage customers with high-value gifts? How can their marketing budgets possibly cope with the potentially high redemption costs?
It is more than likely that your competitors are relying on Promotional Risk Management to stretch the marketing reach of every promotional penny. They are offering customers the chance to win valuable gifts and prizes at a fixed cost. They are launching exciting competitions, coupons and money-back promotions without the worry of going over budget – even if those promotions become runaway successes.
By using Promotional Risk Management you can do this too! Simple changes to your promotion can change it from being a mere sparkler of an idea to a Catherine Wheel of a campaign – exciting your consumers in true “oooooh” and “aaaahhhh” fashion!!! And all this with no worry of skyrocketing overruns.
Imagine this situation: You have launched an on-pack promotion to millions of consumers offering a free personalised mug to anyone who goes online to claim it. The problem is that your budget can only afford for there to be a 20% redemption rate. If the response to your promotion exceeds 20%, it will decimate your budget.
But it’s impossible to know what the redemption rate will be, so what’s the answer?
What if redemptions skyrocket?
The uncertainty is eliminated by using Promotional Risk Management. It provides financial protection in the event that your promotion’s redemption rate goes off faster than a rocket.
A Risk Manager will assess the likely redemption rate based on their extensive knowledge of the market place. So let’s assume with the example used above (the free personalised mugs), that the Risk Manager is in agreement that the promotion is likely to achieve a 20% redemption rate. The Risk Manager will then work up a ‘fixed-fee’ based on the cost of mugs, personalisation, creating an online entry form, data storage, postage etc for that volume of redemptions and present it to the client. Once a contract is signed, even if redemptions skyrocket and the promotion achieves an 80% redemption rate, the client won’t pay a penny more. The promotional risk company pays out for all costs.
It’s all about the squeeeeeze
When a brand has a set marketing budget, how do you work within those limits whilst squeezing the most value from your promotional campaigns. Promotional Risk Management enables you to protect your budget and plan your marketing to the penny.
You can create really high impact promotions without having to worry about the risk of over redemption or awarding winners
Spend £30k. Get 40% sales uplift. BOOM!
Here’s a great real-life example of how a gin brand squeezed out every bit of value from their £30k budget by using us for promotional risk management. Not only did we help steer the strategy, but we sourced a stunning high impact gift for the promotion. And under the fixed fee of £30k we assumed all costs and management of the back-end of the promotion. It became a massive success, achieving 40% sales-uplift, yet Bloom never had to pay another penny for any additional redemptions as it was all financially protected. Read more…
Competitions that offer consumers the chance to win a huge prize attract enormous attention. The bigger the prize the better. Without Promotional Risk Management these types of prizes would be impossible to launch without the brand (or agency) taking on ridiculous amount of risk.
Promotion turns brand into overnight household name
If you don’t believe a promotion can attract enormous attention, then read on. A beer brand running ‘Catch a share of $1 Million’, offered big bucks if a spectator caught the ball during a series of televised cricket matches in New Zealand. Unexpectedly for everyone, the ball was caught twice and suddenly the TV focus moved off the cricket and onto the promotion. It was promotional gold – hitting the news headlines! The beer brand quickly became a household name across the world. And of course, it was us, the promotional risk management company that paid out. Read more…
I wrote this blog because I know ‘Promotional Risk Management’ is a hard thing to get your head around. Even some of our long established clients still ask us to remind them how it all works. I hope the blog has cleared up some of your questions. if not, please take a look around our website or give us a call.