Promotions, specials, and marketing events can all add up to big wins for retailers. They bring in new customers and increase revenue from repeat buyers.
They can also lead to big financial and promotional losses if you don’t forecast your inventory needs correctly. There’s nothing worse than running out of a certain color, make, or model that people want to purchase during one of your events. Unless, of course, you’re left with a huge inventory stockpile when the event is over.
Here are a few tips on how to coordinate your product inventory with marketing to avoid issuing merchandise “rain checks” to unhappy customers or profit rain checks to unhappy stakeholders.
Failure to Plan Consequences
Failure to plan is a plan to fail. You’ve heard that many times before, but it really bears repeating when it comes to promotional inventory planning. Your marketing efforts around your promotion have already built up a “must have this” message in peoples’ minds. So if you run out of inventory during a promotion, chances are very good your prospective customer will buy somewhere else instead of waiting for you to get that “buy now” item in stock.
You might also receive negative customer reviews online or via social media. Someone who comes to your event wanting to buy a specific piece of clothing, only to find out you don’t have their size, could possibly go online to vent. Those negative reviews will linger far longer than your event.
This then decreases overall customer trust and loyalty in your brand. People will have less faith that you carry the items they want on a consistent basis, and potentially veer towards the competition. This could seriously depress your customer lifetime values as well.
Establish Inventory Baselines
So how do you make sure you have enough inventory on hand without tipping the balance too far the other way?
The very first thing you need to do is conduct an inventory review. You want to establish a baseline of items you have in stock to help determine what you can feasibly put on special and what you can’t.
You’ll need to consider historical sales velocity measurements as well as planning to keep a very close eye on velocity during your event. Your planning goal is to do everything possible to anticipate potential item shortages.
There are many inventory management software programs on the market today. Some programs are free to use, depending on the number of users, product lines and so on. Capterra provides a complete overview of inventory management software that you can filter by need. You can see the list with reviews here.
BOGOs and Giveaways
Certain promotions require better coordination with inventory than others, so take this into consideration when planning out your special or event. For example, if you’re giving away a gift with purchase, make sure you have enough inventory to cover the giveaway. This goes for “buy one, get one” types of promotions as well.
Meticulous record keeping is going to be key to your success. Previous promotion trends, such as items that have sold out before when putting on special are going to be central to your planning. You can use this information when deciding how to limit both your promotion dates and corresponding item quantities.
Of course seasonality plays a big role planning inventory levels. It can also play an unexpected role. A hardware store is going to sell more snow shovels during winter, so it’s reasonable to expect a snow shovel special will sell out. A heavier than expected snowfall the morning of the first day of your special, however, can wipe out your “expected” sales forecasts.
Excessive Inventory Curse
You’ll want to keep excess inventory on hand, to offset these unexpected events. Here’s where your records from past promotions can prove especially handy. If that hardware store sold 20 shovels last year, but overall sales this year have been up 10%, it would be reasonable to assume that 22 shovels will be sold this year. Adding an extra two shovels to your inventory (a 10% overage) might be wise.
It could also lead to an excess inventory situation that could spread throughout your store and ultimately bury your business. So you must balance your desire to please as many customers as possible while still maintaining the integrity of your bottom line.
Using Single Promo Codes is one effective way to protect inventory when running promotions. With one promotional code per item, per promotion, you can actively monitor how many coupons are out there and cross-reference that with what you have on hand. It controls the number of people that will be able to purchase that item, and ensures there will be no “carry-over” effect of people saving the coupons for use in another promotion.
You must plan your inventory as part of your marketing strategy so that customers get what they want, at the promotional price you promised. By knowing how poor inventory planning can negatively impact your promotion, and taking steps to plan ahead, you’ll be able to avoid the dreaded rain check.
Get Started Today
If you have a promotion in mind, it’s never too early to start planning from an inventory standpoint. Here are some things you can do today to get the ball rolling:
- Evaluate your system: Take a look at the software or systems you’re using to track inventory. Do they provide an accurate picture, in real time? Can you track key statistics like sales velocity?
- Review past promotions: Either take a look at reports or gather your team together to determine how your inventory performed during past promotions. Did you run out of certain items? Was a promotion during one season more popular than another?
- List potential items: Based on the feedback you’ve received from your employees and past promotion reports, brainstorm a list of items that would be good for promotions. This can be based on current inventory, historical sales velocity, time of year, and any other factors you think might be key.