Bottom Line Up Front: From identifying your objective to choosing the right discount type for your audience, there’s plenty that goes into implementing discount strategies. We break the whole process down here, so you can start seeing the sales results faster.
In our first blog about discount strategies (which you can find here), we broke down some of the basics. We covered the two most commonly used strategies, and we gave you a couple of tips to get the most out of using them.
But today? Today we’re getting into the details. We’re getting into the nuances of how you should be choosing your discount strategy, how you should be optimizing it for your specific business, and how — with the right planning — you can start seeing some major results.
We already know that there are New Customer Discounts and that there are Loyalty Discounts, but did you know that those strategies — and all of the hyper-focused options within them — aren’t just deployed at random? That every single decision you’re making about what discounts to offer, and when to offer them, should be grounded in concrete reasoning?
Like just about everything when it comes to our operations, planning is the secret sauce to success. You’ve got to know where your business is right now, where it’s aiming to go, and how much it can spend to get there — and you’ve got to know all that before deciding on your best strategy.
But enough with the generalizations. Let’s start talking specifics.
Finding Your Objective
The first step to figuring out how to approach discount strategies — the right way for your business — is identifying your objective. What are you hoping to achieve by offering discounts?
Are you looking to increase your sales? To attract customers? To get rid of inventory?
But then we can get even more specific: Are you looking to increase your sales this month, or are you looking to increase your sales over the course of the season — or the year? Are you looking to attract new customers, or inspire old customers to come back? Are you looking to get rid of old inventory to make room for new inventory, or are you looking to generate excitement about certain products that haven’t been getting as much consumer attention?
As those questions tell you: there’s quite a bit of diversity potential when it comes to desired outcomes. But don’t let that scare you away — you’re not limited to just choosing one answer. It’s possible to find a strategy that knocks three or more off the board.
But — and this is a big but — you should always have your top objective identified early on. By prioritizing what you want to have happen, you’ll be framing your next steps around that Number One Goal, and that’ll help your team stay on-track throughout the process.
Types of Discounts — and What They Do
The two primary discount strategies, New Customer and Loyalty, take one big factor into account: who you’re targeting. What they leave out is how, exactly, you should be targeting them.
That’s where discount types come into play. Here are some of the big ones:
- Bundle Discounts: When businesses package products or services together and sell that package for cheaper than they would be sold for if sold individually, they’re offering bundle discounts. These discounts work to increase sales by increasing the number of items sold, increasing the average order value, and decreasing the average cost per order.
Who is this discount great for? Businesses that want to increase sales and get rid of (or generate excitement about unpopular) inventory. By coupling customer favorites with less popular or well-known products, you’re giving customers a way to buy in and try new things with less risk.
Here’s an example: Instead of selling an organization just a range of custom t-shirts or just a range of custom promotional products, you offer a t-shirt/promo product combo package that takes 15% off the overall asking price.
- Volume Discounts: When businesses offer a discount based on the quantity of products/services purchased, they’re offering volume discounts. These discounts work to increase sales by incentivizing customers to increase their orders (and order it all at one time), which increases the number of items sold, increases the average order value, and lowers the average cost per order.
Who is this discount great for? Businesses that want to increase sales and incentivize customers who might not normally be inclined to beef up their orders. It’s also another great way to increase your customers’ exposure to new products — once they hit 50 item counts with three different products (t-shirts, hats, and hoodies), they get a 10% discount on the whole thing. And they get to try out products they might not have considered purchasing before.
- Seasonal Discounts: When businesses offer a discount during a specific season or holiday, they’re offering seasonal discounts. These discounts work to add your business to the (online) conversation, increase sales over a specific timeframe, and get rid of inventory quickly. Plus, they can be customized to target different consumers or types of inventory, depending on your business’s needs.
Who is this discount great for? Businesses that want to increase sales over a fixed period of time, get rid of old inventory to make room for new inventory, and generate attention during periods of time where consumers are looking to spend.
Whether it’s a 40% Black Friday discount or a Back-to-School discount given to return customers that place their orders in the month of August, the options for customization here are plenty.
- Shipping Discounts: When businesses offer a shipping-specific discount based on the size or the dollar amount of a customer’s order, they’re offering a shipping discount. Again, these discounts work to incentivize customers to order more than they might’ve initially been interested in ordering, because there’s something valuable in it for them. The subsequent effects? Inventory’s turned over quicker, the average order value goes up, and the average cost per order goes down.
Who is this discount great for? Businesses that are looking to increase their average order value, get rid of inventory faster, and incentivize customers without reducing their margins too much. Nuances like only offering the discount to return customers, or only offering it to new customers that sign up for an email newsletter, are great variations to consider depending on your objective.
- Conditional Discounts: You likely see conditional discounts frequently as a consumer — the Buy One, Get One Free or Spend $500, Get $50 Off phrases that seem to jump off of the page, or the email, or the flyer and get you browsing. They’re frequently used because they work. They capture interest, increase average order value, turn over inventory quicker, and can be customized based on your objectives easily.
Who is this discount great for? Businesses that are looking to use psychology to win customers and increase sales. It’s been proven that most consumers prefer strategies that offer “free” items to strategies that offer discounted ones, and are more driven to act for the former. Why? It comes down to math: the concept of “free” is far easier to understand than the concept of a discount — or a fraction — so our instincts as buyers are immediate (and often strong).
Like all other discount types, there’s a ton of customization potential with conditional discounts; you can choose which products to include in the offer, the timespan it’ll run, and even who’s permitted to partake. It’s all up to you.
Obviously, the most important factor to consider when you’re choosing which discount strategy and type to go with is how much you can give up without hurting your bottomline. By taking into account your numbers, actual and perceived for the campaign, you’ll be able to figure out the kind of discount you can get away with.
The goal is to increase profits, so you need to be aware of your margins at every step. But once you’ve figured out the sweet spot, you’ll be able to customize and adjust for every campaign — present and future.
Knowing Your Audience
Just like there’s not a one-size-fits-all way to go about discounting for businesses, there also isn’t a one-size-fits-all discount that’ll attract all consumers. Buying behaviors vary greatly based on industry, needs, budget — and even geographic location — and that means that you need to know who you’re selling to before you make any selling strategies final.
Will your customers appreciate products that are significantly discounted, or will that turn them off your brand because of perceived low-value? Will they respond to quick 24-hour sales, or do they need weeks or months to think their orders over?
The best way to track your target consumers’ needs is by looking at your customers today. What are their order life cycles like? What products and services do they value most, and how much have they been willing to spend on them?
By breaking your customers up into segments — maybe your corporate customers fall under one category, and then your schools and camps under another — you’ll be able to pinpoint discounting strategies that will appeal to them. And when sales feel personalized, they have greater impact — and greater results.
Here are a couple of examples of using your audience insight to craft meaningful discount strategies:
- Pay Attention to Industry Shifts. When COVID struck, smart decorators and print shops wasted no time getting into product offerings like face masks and Online Fundraising Stores. And the smartest decorators integrated discounts into those offerings — Buy 100 Masks, Get 10 Free. When your Online Fundraising Store sells 100 t-shirts, we’ll cover shipping. Identifying the demand and squeezing every bit of order value from it is how you captivate your audience — through discounts — while capitalizing on the sale.
- Time Your Strategies Perfectly. With apparel decorators and print shops catering to a wide variety of customers, it’s crucial that you know who you’re targeting when — and what each of them is looking for. When you’re aiming at schools and teams, your discounts should orient around their schedules: Back to School Specials and Pre-Tournament Sales, for example. But when you’re shooting to impress customers in the nonprofit sector, you’ll want to do your research on their schedules: when their annual fundraisers are, where there are gaps and lulls, and where there are opportunities for new fundraisers.
By showing up at the right time with the right offer, you’ll be maximizing your sales and providing real value to your customers — while earning the ancillary perks like overturning inventory and lowering the cost per order at the same time.
- Be A Pleasant Surprise. Once you’ve figured out who you’re selling to, what their schedules look like, and what their product and service needs are, work to offer them the value they’re looking for — before they even start looking. The best businesses are able to pinpoint consumers’ needs before consumers are even aware of them, showing up with offers they can’t say no to.
One example of this? Targeting corporate customers with discounts on “˜Work From Home’ bundles for employees, right at the start of the WFH era. Another example is offering Online Fundraising Store discounts to organizations that, without live events on the table, need a new way to fundraise. And a third option: offering teams and leagues discounts on custom fan wear with messaging that strengthens the hope, and the spirit, of the community — even when sports might be on hold.
You should know your customers better than they know themselves, and you should be offering them real value in your discount strategies. So much value that they can’t ignore it. When you surprise them with that, they’ll always keep you front of mind.
Don’t Forget Fun
The final tip we’ll give you is this: even though discount strategies are a smart business endeavor, and even though they include some risk to your profitability, it’s still your responsibility to make them fun.
Make them something your consumers want to partake in, something they’re excited by, and something that they see as an enjoyable buying experience.
There are two ways to pull this off — the first is digital marketing. Are your visuals captivating? Is your messaging clear? Is it easy to understand what the offer is, who it’s for, and how long it’ll last?
And then let’s get even more specific.
Are you marketing the discount campaign on the right platforms for your target audience?
Are you emphasizing to email recipients that they’re part of the exclusive group of long-time customers receiving the discount offer, or are you explaining to your audience on Instagram that when they refer a friend, they get a 10% discount?
Clarity, strong visuals, and the right campaign for your audience are how you generate intrigue, attention, and results through digital marketing. And, since InkSoft’s Online Stores are so innately shareable, your campaigns are just a click away from success — at all times.
The second way to nail the “˜fun’ component is to bring creativity into the mix. Consumers are drawn in by efforts that stand out — campaigns that offer something new and exciting, products that they can’t find anywhere else, and brands that are remarkably one-of-a-kind.
So use what you’ve got to make that happen.
One example we love? Discount Happy Hour. Run a daily “happy hour” for a couple of weeks where, during unconventional shopping hours, you offer a pop-up sale. Maybe that means first thing in the morning or maybe it means at lunch — the point is, you’re hitting your customers with news of a sale when they’re scrolling, but not when they’re thinking of shopping.
Your fun alert — whether an Instagram story, an email, or a text (if you’re only targeting your top customers) — is the key to generating excitement. And since this happy hour is a daily recurrence, there’s urgency — but it’s not reckless. Customers still have the time to work up their desire to partake.
As a discount campaign strategy, this is a fantastic driver for results. But it’s also a fantastic way to drum up attention online — by being known as the brand that offers value-packed, pop-up sales, you’ll be increasing your reach and your engagement (since everyone wants to know when the next sale is)!
In Conclusion: Discount Strategies Work Wonders
…But only when you use them smartly. So start doing your research: identify your objectives, pick your discount type, get to know your audience, and plan out your sparkle of “fun.”
The best part is, with InkSoft’s extensive features and your ability to customize them to your heart’s content, implementing whatever strategy you decide on couldn’t be any easier.
We can’t wait to see how you take this Tip of the Day and run with it. And, if you haven’t already explored all of what InkSoft’s Online Stores have to offer, what are you waiting for? Check them out here — and then reach out to us and we’ll get you started right away.
