A sales promotion is a short-term activity to stimulate sales that goes beyond normal advertising and public relations. The promotion’s purpose may be seasonal, a reaction to a competitor’s move or for no other reason than “we always do it.” Or it may be directed toward improving sales performance in either the short or long term. Measuring the effectiveness is an important task to determine if promotion money is well-spent.

Test market your sales promotion. By using a target market, you will evaluate your promotion before you roll it out for all. Test marketing will help you refine the promotion’s objectives, determine your target audience and fine tune the selection of your promotion tools. You will find that if the promotion lasts too long, the customers will lose the incentive to “buy it now.” If the promotion is too generous, then customers will stock up on products, helping sales in the short run but hurting them in the long run. The downside of a test market is that you may not be able to measure long-term effects.

Determine you budget. Cost is a major consideration in evaluating your promotion, especially if it is expensive. You may allocate a percentage of anticipated sales to pay for the promotion. In this case, reaching your target sales will define the promotion’s success. Your budgeting may fall back to how much you can afford. In this case the sales or profit targets must be selected based on previous experience or your best estimate. Part of your evaluation of the promotion will also be assessing the legitimacy of your targets.

Use coupons, response cards or surveys as part of your evaluation. A coupon count gives you an instant measure of participation. Though the number of coupons returned will disclose how many customers used them, there is no immediate way to determine how many of these customers will return to your business. Gather customers’ names and contact information so that you can survey them after a reasonable period. Ask about product satisfaction, customer service and their likelihood of being return buyers. Whether you are selling business-to-business or business-to-consumer, not only will surveying give you solid feedback, it will also strengthen customer relations, making repeat business more likely.

Assess the value of goodwill to your business.Your target sales and profits are obvious quantifiable metrics to measure a promotion’s efficacy. However, they may not be sufficient. If your objective is building community relations, using event marketing or youth sports sponsorship, for example, then there may be no way to measure effectiveness. And if your promotion is a repetitive event, there may be no positive impact by holding it, but a negative impact if it is discontinued. Similarly, if your sales are business-to-business and you promote through trade shows or conventions, the promotion’s success may be hard to quantify. In the long run, the success of your promotions will be measured by increasing sales and profitability.