What Is Sales Lift And How Does It Help Brands And Retailers Measure The Success Of In-Store Promotions?
This blog post will help you understand the promotion equation brands, retailers and marketers use to measure effectiveness.
Let’s say you’re a CPG brand looking for an increase in sales. Or, perhaps, you’re the advertising and marketing agency that has been tasked to impact sales for a well-known product over a specified time period.
Chances are, you’re going to come up with a cool new promotional campaign to lift those sales numbers. Great idea. Maybe you do it by advertising special sales pricing. Maybe you launch an email marketing campaign supported by a blog post or two. You might even run a popular BOGO promotion. They’re all good ideas.
In fact, a recent study cited in a post on INC.com shows that two-thirds of consumers have made purchases they weren’t originally planning to make solely based on finding a promotional coupon or discount. Additionally, the study points out that 80% of consumers surveyed said they would be encouraged to make a first-time purchase with a brand if there is a promotion or discount offer attached.
So, all you have to do is implement a new promotion and sales are off to the races? Unfortunately, it’s not quite that easy. Many product promotions and marketing campaigns fail to deliver the increase in sales that was expected. So, how do you know if your promotion or campaign is working? One way is to calculate a very specific retail data point called sales lift.
What Is Sales Lift?
Sales lift, often referred to as incremental sales lift, is a way for marketers and retailers to calculate the effectiveness of their marketing efforts and promotions.
Sales lift is defined as the incremental increase in sales that occurs during a specific promotional time period versus the baseline sales that would have occurred during that same time period had the promotion never been launched.
Calculating Lift In Sales
The incremental sales lift formula is a relatively simple one but first we should define some sales data points.
Actual Sales – This is the dollar amount of total product sales during a specified promotional time period.
Baseline Sales – This is the estimated dollar amount of total sales during the same time period if the promotional campaign had not taken place. Baseline sales data can be determined in a variety of ways. The previous year’s sales data can be used to predict a baseline. Some retailers compile sales data for a set time period prior to a promotional launch and compare it to sales data for that same length of time post promotion to average out a baseline figure.
Incremental Sales Lift – The difference between actual sales and baseline sales equals sales lift. This can also be determined as a percentage of sales increase.
To calculate lift, we have a two-step formula:
Actual Sales – Baseline Sales = Incremental Sales Lift
Then, to determine the sales increase by percentage:
Incremental Sales Lift ÷ Baseline Sales x 100 = % Increase
With this two-step process, brands and marketers are able to see the impact of their advertising, marketing and promotional programs. It’s spelled out in hard sales data that facilitates a clear and confident analysis of incremental lift.
Determining Lift Using Test Markets
Lift is calculated to see if a marketing effort or promotion actually generates a measurable lift in sales. We gave you the formula to determine lift, however, there’s another way to measure it without having to guestimate a baseline sales figure.
In this method, lift is calculated by using control and test markets. In other words, you run a promotion in one store or market and compare sales to those generated in a similar store or market that does not run the promotion. There are a few ways to set up test and control markets.
- Matched Markets: A brand selects two markets or locations that enjoy similar demographics. One deploys the promotion. The other does not. Lift is determined by the difference in sales.
- Balance of The Chain: In this case, a larger brand will select a set of markets that generally represent the brand’s coverage area and audience demographics. This set of markets deploys the promotion, while stores in the rest of the country do not. Average sales in the set are compared to sales nationwide.
- Group to Group: This method involves determining two similar “sets” of sales regions. One set gets the promotion, the other does not. Average sales are then compared to measure incremental lift.
Other Data That Impacts Lift
Determining baseline sales data or test markets are not the only considerations for a brand that’s looking to measure its promotions. Other data, including seasonal trends, traffic, merchandising compliance, inventory data, customer behavior, customer engagement, and competitive intelligence should also be considered when performing a sales lift analysis. Performance in all of these areas, after all, impacts retail sales, which is why new advancements in data-driven retail technology are now driving decisions for many brands and retailers.
Digital Data Solutions And Incremental Lift
You’ve likely heard the term Retail 4.0 bantered about a lot lately. It refers to the digitization of brick-and-mortar retail and the integration of omnichannel sales through the use of advanced software and data solutions. These solutions provide brands and retailers with unmatched visibility into their operations, which is certainly advantageous when it comes to measuring sales and lift.
“Our software and data solutions give our clients the ability to instantly see and analyze internal and external data across every area of their operations. They get clear reports that spell out sales data by region, location, even at the individual store level. They can measure merchandising compliance, inventory management, employee performance, marketing, promotions, store appearance, seasonal trends, weather factors, and a lot more. It’s all done to provide crystal-clear insights into operations, which of course leads to stronger, more informed decision-making, whether that’s guiding a short-term promotion or a long-term sales goal.”
To Mr. Santaella’s point, brands and retailers are using real-time data solutions to analyze sales and operational performance prior to launching campaigns. Then, they’re using the same tools to measure sales lift more accurately than ever before, taking into account observational data, such as in-store conditions, promotional signage and merchandising, as well as activity data, like how effectively sales reps are engaging customers.
The advantages of integrating digital data are tremendous, both in helping retailers plan a promotion and in accurately measuring the sales lift it delivers.
If you found this blog helpful and are interested in learning more about the new ways data solutions are driving retail success, visit www.mobileinsight.com. Also, check out our other blog posts that discuss retail technology and how you can leverage it for your business.
Mobile Insight® is the only retail and merchandise management solution designed to meet the brick and mortar sales challenges of high-value brands and retailers. Unlike hardware and software providers that focus on fast-moving goods, the Mobile Insight® platform delivers assisted sales solutions for more complex, interactive, and customer-centric environments. Combining data from in-store systems, 3PLs, employee and partner activity, Mobile Insight® enables informed, smarter decisions that drive sales and operations excellence. For more information, visit www.mobileinsight.com.
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