Buy One Get One Free Sales Events

Will a BOGO Event in Your Retail Store Make You Money?

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One of the biggest marketing ideas in recent years has been the concept of Buy One Get One. This can come in a variety of offers from buy one get one free to buy one get one 50% off. But no matter the variety, they all do one thing very well - they drive sales. 

The most important part of writing effective ad copy is to have a compelling offer. And buy one get one, or BOGO for short, is compelling. Like many offers, it is the perception that is most important, not the reality. In fact, the reality is if you do a BOGO 50% off, it is the same as 25% off your entire purchase for the customer, but it feels like so much more.

I remember when the state of Texas implemented a sales tax holiday the first weekend in August for back to school supplies. It included anything a child needed for school. So in addition to pencils and paper it also included backpacks and clothes and shoes. Any of the qualified items that a person bought this weekend (even if they may not use it for school) was tax-free. 

That first weekend, we did more business than any other weekend that year - yes, including Black Friday or Christmas weekend. We were definitely caught off guard. People came in the stores in droves and our staffing was for a 15% sales gain YOY, so we were not prepared. Thankfully, we got people in the store and had a terrific, fun weekend. (Always fun when you are selling more than ever!) But the amazing part was the deal or offer. Each customer saved 8.25% (our sales tax rate) and that was it.

We had no other deals or sales that weekend. They just saved 8.25% and the customer loved it! And we loved it even more as storeowners. 

The perception for the customer was that they were getting a big deal. And that is what matters. BOGO is one of the best "perception" offers you can use. But the beauty of this offer is in its benefit to the retailer. 

If you were to run 50% off everything in the store, you would have a lot of tickets with one item on them. That means your margins for the day would be hit hard. But if you did a BOGO, then your margins still take a hit, but not as dramatic. Let me illustrate.

If you have keystone margins (50%) on items, then every time they get a keystone item with 50% off, you are break even. But not everything in your store is at keystone. You have items with even higher margins. So, directing a customer to buy one then get one means that your margins can be less impacted. For example, if they buy a 60% margin item and the free one is 35% margin, you just came out ahead.  

BOGO is designed to clear out and move inventory. Use it in that way. It is also a way to create cash flow. Use BOGO when you want to generate more cash. People have to buy more (higher $ per ticket) to get the offer, so you get more cash. While this is only true if your BOGO is a % off the 2nd item; it does work. And since BOGO is a common offer for customers now, the psychology of the deal is often times the same - meaning BOGO free and BOGO 50% still make me as a customer feel like I got a great deal.

Just like the sales tax holiday made the customer feel like they were getting the best deal. 

Let's face it, I could run a 16.5% off everything in the store event (double the sales tax) and not even come close to the amount of sales we did during those sales tax holidays. 

One note on the "dark side" of BOGO. They are people who, if they cannot find a 2nd item, will not buy the first. But these are a small % of your customers. So do not let them freak you out. Just know that it will happen and make sure that you have plenty of great 2nd items to choose from in your store.