Article Don’t Discount These Tips To Increase Sales!

Have you ever discussed prices with your locations and discovered that they think vending machines usually charge more than convenience stores like 7-11, Circle K, etc.? Surprisingly, this seems to be a common belief—and of course, it’s wrong in most cases!

Penny for penny (or quarter for quarter), most vending machines products are priced at or below convenience stores, but the stores give the perception of “getting more for less” through discounts and promotions.  Large “thirst-buster” sizes, free refills, etc. are designed to capture customers’ interest and their money.  Let’s face it—the average person doesn’t really need 44 ounces of soda!  But they think, “Look how much I can get for only 89¢!”, even though 89¢ is more than they would pay for a 12 ounce can—and they often don’t finish drinking all 44 ounces, either!  But the “more for less” perception of the larger size induced the customer to spend more money than they normally would.

Armed with a “thirst-buster”, the average convenience store customer may add some chips or a candy bar, and this brings up a second powerful concept—combo purchases.  Obviously, the great thing about salted snacks is that they require a cold drink to wash them down.  Studies have shown that beverages are purchased more often in combination with salted snacks than in combination with candy.  So, many distributors prefer to stock more salted snacks than candy for just this reason—so the salty flavor will result in a drink sale.

So how does the average distributor combat the convenience store perception of “more for less”?  First of all, you should consider regularly offering discounts on selected items.  Most distributors—if they use discounts at all—use them to clear out items that are nearing an expiration date.  That’s perfectly sound, but should you also discount an item that’s routinely selling well?  Yes!  It’s a very powerful tool to periodically feature an item or two with a noticeable discount—a 20% discount, for example, can really stimulate sales.

While some might think this cuts too deeply, check out the math (and we’re going to use very conservative round numbers here):  If you pay 35¢ wholesale for an item and normally sell it for 75¢, try knocking it down 20% to 60¢, and advertise “20% Discount!” somewhere on your machine so the customers know they’re getting a great deal.  You’ve lowered your profit margin by 15¢ per bar (from 40¢ to 25¢). Even if sales due to the discount only account for five or six more items being sold, you’re making as much or more than you would have without the discount—in other words, you’re trading the lower individual profit margin for an increase in sales volume.

And here’s a bonus:  Your customer has 15¢ more than he would have had before your discount, and very often will combine it with other pocket change to make yet another purchase—maybe a Coke to drink with his discounted snack!  You’ve just made a combo sale and increased your earnings. The point is, that sale might not have occurred without the discount causing the customer to perceive that they were “getting more for less”.

Three very important warnings:

•  Never discount your very top selling items, since they’re the backbone of your regular revenue;

•  Don’t discount lots of items; usually only one or two. And don’t discount every day—keep your customers interested and guessing when the next discount will occur;

•  Never discount new items—they’ll generate enough interest just by virtue of their newness.

Using these occasional discounts can keep your customers interested in regularly visiting your machines, and encourage those combo purchases.  Learn from the convenience stores and dramatically improve your sales!