Your the top opportunity to convert your inventory backlogs into precious cash.

For many small, independent retailers, January moved coming from a difficult month to a frightening month. Coming off of an exceptionally weak holiday selling season, containing left them behind the bucks eight-ball, sufficient reason for headlines of doom and gloom raging as being a storm above them, they now experience the observing a sea of clearance merchandise with few customers coming from the doors, regardless with the discounts on offer.

What to do to pay off this inventory out, and generate necessary cash, before it backs all the way up up into the spring?

As urgent as the moment is becoming, there's also a real anxiety about putting the full store on discount sales for 75% or 80% off, (and nobody's even sure at this stage if it would drive more visitors with the door) and doing serious harm on the very integrity of the store itself. How will we ever encourage them to pay full price again?

Successful small retailers have long known the absolute best marketing was the non-public referrals and recommendations that their finest customers gave to their friends. These retailers have historically arrived at great lengths to foster and nurture these customers, given that they were the route for the next tier of clients. They have carried this out steer clear price promotions, but trunk shows, private viewings, and other special occasions. They have attempted to extend the warm, gracious and engaging atmosphere of those events with their sales floors in general, wanting to produce a comfortable and inviting shopping experience. Long before there ever were loyalty programs, this became their intuitive procedure for building enduring first-name relationships using their best customers.

I've been utilizing several clients on leveraging these relationships to clear your backlog of seasonal inventory while protecting over time equity with the store itself. Without question, it's a tough joggling act. Still, what we've think of is worth considering if you find yourself in this situation at the same time.

Rather than likely to 75% or 80% off, perhaps you might need to complete if you took a straight clearance approach, or adopt a BOGO structure that leaves you essentially with a similar level of discounting, here's how we've approached it.

First, we've started as well as leaving discounts where they've historically been for second markdowns, usually at 50% off. Then we've built a person referral program on top of those discounts. Working through the existing customer subscriber list, we've delivered emails offering these customers a gift certificate whenever they bring the email as well as a friend not on our optin list, understanding that friend spends at least a given amount and provide us her email. Then, we offer exactly the same opportunity for the new customer, a gift certificate if she brings in another friend, who spends at the very least the given amount and offers us her email address contact information.

We've been working with a two to a single ratio between the minimum amount that should be spent as well as the value from the gift certificate. For example, if the minimum amount that had to become spent was set at $100, then your gift certificate would be $50.

This works well with my clients for assorted reasons. First, we're giving their finest customers a reason ahead in and discover what's on sale. In an environment of weak traffic counts, these include the customers who are predisposed into the future back in. These are the customers who are most of the easiest to convert, and enjoy the highest average transaction and units per transaction.

Second, the friend is most likely gonna spend more compared to minimum amount, and the current customer may make a purchase also, whether she uses the gift certificate in those days you aren't. So, we're going to undertake those clearance units, and probably at a cumulative discount of lower than 75%.

Third, we're adding new names on the optin list. These are the customers we should pursue in the coming months, to welcome and embrace. Whether business remains difficult, or even the spring starts to show a rebound, these new company is needed to grow the base the business is built on.

Finally, we're avoiding any banners or signs screaming "75% OFF". Yes, we're using price to incentivize our best customers, in a method that's more subtle plus sends what it's all about that they're special and important, since they truly are. It gives us good chance to minimize any long lasting harm to our price integrity.

In now, when it's not easy to get foot traffic to your store, and tougher still to encourage them to open their wallets, turning for a best customers gives you the top possibility to convert your inventory backlogs into precious cash. It's also the least expensive way, from both a marketing and a markdown perspective. You've spent a lot of years working on your relationships with your loyal customers. Now will be the time to turn to them.