Some of the most useful sales-promotion tools every service organization must use are as follows: 1. Free samples/visits/consultations 2. Money-off price incentives 3. Coupons/vouchers 4. Gift offers 5. Competitions 6. Short-term discounts 7. Sign-up rebates 8. Short-term increases in sales commission 9. Point-of-sale material 10. Cooperative advertising.
These encourage trial of a service and can be valuable where consumers are loyal to an existing service supplier. It could, for example, be used by a video film-rental chain to entice potential customers into their branch so that they can learn something about the nature of the service on offer.
In the case of new services that are perceived as being expensive and of poor value to a consumer, they can encourage trial – this has been used by satellite television companies, for example. Taken to extremes, the excessive offering of free samples can demean the value of the service on offer and of the service provider. Customers may become reluctant to pay for a service which they have seen being given away freely.
These are used to stimulate demand during slack periods where price is considered to be a key element in customers’ purchased activity. Price incentives can be used tactically to counteract temporary increases in competitor activity. They can also be employed to stimulate sales of a new service shortly after launch. Price incentives tend to be expensive to the service provider, as the incentive is given to customers regardless of its motivational effect on individual customers.
A leisure park reducing its prices for all is unable to extract the full price from those customers who may have otherwise been willing to pay that price. There is also a danger that price incentives can become built into consumers’ expectations and their removal may result in a fall in business.
These allow holders to obtain a discount off a future purchase and can be targeted at quite specific groups of users or potential users. To encourage trial by potential new users, vouchers can be distributed to non-users who fit a specified profile. In this way, the operator of a plaza might arrange for vouchers to be given to customers of a cooperating hairdressing salon.
To encourage repeat usage, vouchers can be given as a loyalty bonus. Voucher offers tend to be much more cost effective than straight price incentives because of their ability to segment markets. In this way, a leisure park operator is able to recognize that a visitor from overseas may see the full price as being only a small part of their total holiday cost and representing good value, while a local family might need an incentive to make more frequent visits to the park.
Coupons usually take one of three forms a straight price cut; a discount or fee waiver for one or more patrons accompanying the original purchaser; or a free or discounted enhancement of the basic service (such as free waxing with each car wash).
Traditionally, coupons were printed in newspapers and magazines or sent by direct mail. Today, however, they are often sold in books which provide purchasers with the opportunity to use the services of a wide array of restaurants and cafes, laundry and dry cleaning establishments, garages, cinemas and other suppliers. With the advent of electronic scanning in shops, many of these promotional offers are now implemented electronically.
These allow an organization to augment its service offer with an additional gift which can satisfy a number of objectives. In order to promote initial enquiry and to give tangible cues of the service company’s offering and image, many firms-especially in the financial services sector- offer a gift for merely enquiring about their service. Items offered by insurance companies for merely requesting a quotation often include pocket calculators and pens.
A gift can also be used to bring about immediate action-for example, a free clock radio if a policy is taken out within a specified period. For existing customers, gifts can be used to develop and reward loyalty. Sometimes, a company may charge for a gift, making the sales-promotion self-financing. The gift could also carry a message that makes the service tangible to the user and others. In this way, some petrol retailers and football clubs-among others-sell ranges of promotional clothing, paid for by a combination of vouchers and cash.
The inclusion of a competition in a service offer adds to the value of the total offer. Instead of simply buying an insurance policy, customers buy the policy plus a dream of winning a prize to which they attach significance. Competitions can be used both to create trial among non- users and to retain loyalty among existing users (for example, a competition for which a number of proofs of purpose are necessary to enter). Prize promotions introduce an element of chance, like a lottery or sweepstakes.
They can be used effectively to add involvement and excitement to the service experience and are generally designed to encourage increased use of the service. Fast-food restaurants, video rental outlets and service stations sometimes offer lottery-like promotions tied to special events giving all purchasers tickets with scratch-off award categories. TV stations may offer listeners the chance to claim instant cash and other prizes if they call within a prescribed time after the announcement is broadcast.
Price cuts that are promoted as being available for only a limited time period, such as any form of ‘sale’ designed to boost business during slack periods. Another example is ‘charter memberships’ in health and fitness clubs which are sold at decreasing rates of discount prior to opening the club; such strategies help to build a base of customers quickly and improve initial cash flow.
May be offered by ‘membership’ service organizations that charge a preliminary sign-up fee for applying, joining or making connections to a network. Examples include application fees for education institutions, joining fees at many private clubs and installation fees for connections to pay TV systems. To attract new members or subscribers, these fees may be waived or alternatively credited towards payment of future usage fees.
These, together with sales bonuses, can be used to stimulate sales during slack periods or to develop loyalty from intermediaries in the face of competitor activity.
To stimulate additional sales, a service principal can provide a range of incentives to help intermediaries. Examples include tour operators who agree to send a representative to a travel agency to provide additional information and reassurance for customers, or to host a film evening for the agency’s clients.
A service principal often agrees to subscribe to local advertising by an intermediary, often in conjunction with a significant event-for example, the opening of a new outlet by the intermediary or the launch of a new service.