Bottom Line Up Front: In today’s era of e-commerce, your customers are confronted with the competition every time they go online. Separate yourself from the crowd and show them just how much you value their business by offering discounts — with the right strategy, you might just start seeing some powerful results.
In an age where everyone and their brother is selling online, your customers (and prospects) are overwhelmed with options. That means you need to be working that much harder to stand out in the digital marketplace — both in the initial stages of attracting them, and in the longer game of keeping them coming back.
A well-used discount strategy could be your secret weapon.
Discount strategies, or the implementation of discounts (percentage-based or monetary gift certificates) that are given to customers to motivate them to complete a purchase, have the power to transform what’s possible for your sales. But only if they’re used properly.
This blog will break down the two primary types of discount strategies utilized by retail sellers today. We’ll look at what works and what doesn’t, and we’ll leave you with some tips for positioning these techniques so they make sense for your business.
Ready? Let’s jump in.
Discount Strategy #1: New Customer Discounts
Bringing in new customers is arguably one of the most difficult, and labor-intensive, elements of running a business. From generating interest to locking in the sale, there are plenty of steps in the buying process where prospects can turn around and walk out — or, in our 2020 case, simply exit the tab.
So, once they’re in your Online Store, you want to be doing everything you possibly can to convert them. It’s your job to make the purchase so enticing, and so urgent, that consumers have no choice but to buy in.
That’s where new customer discounts come in. Most typically in the form of a percentage discount, these codes or coupons work to incentivize prospects into completing their first order by lowering the barrier to entry.
Think of it like this: first-time customers don’t know what value your products and services will bring them yet. They’re not sure if choosing you over the next guy is the right choice, and they’re not sure if choosing to spend their hard-earned money on what you’re offering will pay off.
A new customer discount helps to decrease that innate risk — and it helps to show them that you care about the decision they’re making.
And, since we know that it’s easier to sell to an existing customer than it is to hook a new one, this strategy helps you convert leads that have made it onto your page into customers that you’ll be able to sell to for years to come. Getting that initial sale is great, but this strategy also works to help you lock in future sales — and increase future revenue — too.
But beyond just incentivizing the sale today and setting up sales for the future, discount strategies also harbor less obvious benefits. Benefits like getting you consumer data and marketing data — that you can then use to inform future decisions and secure future sales.
Let’s get into consumer data first. One technique you’ve probably seen, as a consumer, time and time again from online sellers is first-time buyer discounts that are only unlocked with the entry of an email address. By signing up for newsletters with the brand, you’re getting 10% or 20% off your first order — which, for many, is a worthwhile motivator.
From the business’s perspective, every time a consumer signs up for the newsletter, they’re acquiring a direct way to contact them — and stay in touch. That makes things like keeping them up-to-date on new products, letting them know about new offers, and reaching out to them for feedback/surveys/testimonials possible. And all of those communications work to keep the brand front of mind.
Now, let’s look at marketing data — or how first-time buyer discount codes can be used to give you insight into your marketing efforts. The truth is, it’s pretty simple: all you have to do here is use one discount code for one marketing campaign, and a different code for another, and then let the metrics speak for themselves.
Are more consumers inputting Code A, or Code B?
By testing for efficacy, you’ll be one step closer to figuring out which campaign is reaching — and converting — more consumers, and you’ll be better positioned to mold your next marketing effort accordingly. Whether it’s deciding which platform to generate interest through (be it Facebook, Instagram, or email), or deciding which visuals and messaging to use in the campaign, there’s the potential for you to learn a lot about your consumers. So why not hit two birds with one stone?
Or better yet, why not hit three? (Sales? Check. Consumer data? Check. Marketing data? Check again!)
Discount Strategy #2: Loyal Customer Discounts
The second discount strategy commonly used by sellers big and small is the loyal customer discount strategy — where pre-existing customers are rewarded for their loyalty. That can look like a number of things: from a percentage-off discount code for specific products to a “Buy One, Get One Half Off” discount code to a seasonal discount code, there are limitless options.
But all of them work to increase brand loyalty — and earn you sales.
Psychologically, showing your customers that you appreciate their business through clear-cut incentives helps them associate you with real value. By going the extra mile and reaching out with opportunities that’ll benefit them, you’re finding ways to stay front of mind, generate interest, and motivate sales — and that’ll come with some real results.
For the customers who’ve been browsing your page and thinking about making a purchase, a discount code could push them over the edge, motivating them to finally check out their paused or abandoned shopping carts.
For the customers who are active spreaders of good news, a discount code could inspire them to share it with their network — whether on social media, via email, or simply by word of mouth. At a time when everyone is looking for great deals, your discount strategy could earn you free marketing, an expanded reach, and more sales — now and in the future — than you could’ve unlocked yourself.
Beyond those benefits, loyal customer discount strategies help you learn more about your consumers’ needs today. They might’ve purchased one thing from you last year, but what are they buying right now — now that they have the discount? How can you learn about new needs and better position your offerings to meet them, and how can you reach out to customers with new ideas for high-value orders before they even think to ask?
By gauging more insight into consumer behaviors and needs right now, you’ll be arming your team with the knowledge it needs to catch every sales opportunity — even before it pops up. Plus, just like with new customer discount strategies, here you’ll also be able to obtain the metrics needed to figure out which marketing campaign leads to the most fruitful results.
It comes down to retaining customers, securing sales, and gaining the insight you need to keep playing the long-game better than your competition. And all of that’s possible with this strategy.
Implementing the Strategies for Success
For apparel decorators and print shops, the idea of offering discounts en masse — and effectively lowering the earnings on each sale — can sound daunting. But when you take into account all of the new sales you’ll be generating with these strategies in place, the bottom line will wind up much stronger, and much more poised for long-term momentum, then it would’ve been before.
So keep an eye on the big picture — and remember that these strategies only work if they’re personalized for your business. Sit down and start thinking about what an X% (or $X off) discount code might look like for your offerings.
Would it be a banner on your Online Store, or would you run a digital marketing campaign to get the word out? What would the campaign look like? Who would it target? What sort of response might you expect? Taking a small hit on the profit of each sale in order to provoke a higher number of transactions isn’t just a sturdy sales strategy, but it also brings you the marketing momentum that’ll help you stand out.
And when we’re talking discount specifics, an important note to keep in mind is that going big with the discount doesn’t always bring you bigger results. Oftentimes, a small discount is enough to arouse interest, get customers onto your Online Store, and motivate them to complete the buying journey. Don’t go bigger than you have to, and your returns will be even more dramatic.
The final tip we have for you when it comes to these discount strategies is this: A/B testing is your friend. Just like you A/B test your marketing campaigns to acquire more insight into what your consumers respond to, so too should you be testing your discount offers.
Try a 10% off and a 20% off — if there’s no marked difference between customer reaction to the two, you know that 10% is substantial enough to get the desired results. Try a discount code with a 1-week expiry date and another code with a 4-week expiry date — and then take note of which code leads to more conversions in a 7-day time frame. See how much urgency plays into your sales, and amend your strategies based on that new insight.
The Wrap Up
Discount strategies are a great way to optimize your sales, enhance your digital marketing efforts, and keep customers happy. When you customize a strategy based on your business’s offerings, margins, and audience, you’re setting your team up to see results that wouldn’t have been possible otherwise.
Remember: it all comes down to the big picture. Increased sales mean that it’s okay to lose a little bit of per-sale profit — especially when you’re doing everything you can with your digital marketing to maximize the consumer response.
So take this information and run with it. Apply it to your business, see where there’s room for customization, and start thinking about what implementing it right now would look like. An email newsletter to old customers? Facebook ads to target new ones?
The power of discount strategies is in your hands. Now it’s just up to you to wield it.
And, if you’re not already set up with an Online Store of your own, be sure to take a look at what they’re capable of here. With total customization power, simple-to-navigate pages, and opportunities for as many banners, messages, and media as you’d like, these stores help you carve out your digital presence. And they make it easy for your audience to catch wind of the latest offers, products, and discounts. Check it out now!
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