Discounting your products might not be your favorite thing to do – after all, you want to make as much money as possible! But offering strategic deals can be a powerful means to boost your sales – without devaluing your brand.
When considering your discounting strategy, it’s important to consider what you want to get out of it. Discounts should serve one of two purposes (and maybe both!): increasing overall sales, or driving sales towards certain products.
If you’re aiming to drive overall sales, you can do it by either making an additional sale to an existing customer, by gaining new customers, or by increasing your average order value.
Alternatively, driving sales towards certain products might be necessary if you’ve got a lot of stock of something nearing an expiration date, or which is about to become out-of-season – or, you may want to sell more of it because it’s got a particularly high profit margin.
This guide will help you to choose the right discounting strategies for your business, and give you some pointers to implement them in the most effective way.
Incentivize new customers to give you a try.
Unless you have a brick-and-mortar store, potential customers probably haven’t seen your product in action. And while your clever marketing and good reviews have brought them this far, they probably need an extra push to get them through the checkout. This is where you offer them 10% off their first purchase, as a little ‘nudge’ to make sure they follow through with their purchase.
Boost sales by rewarding customers for referring friends.
Asking your existing customers to refer their friends to you should be pretty high up in your marketing playbook. After all, referrals generate warm leads to potential customers who are pre-disposed to trust you because you come recommended! Obviously, you can try to get referrals just by asking nicely, but for a lot of your customers this will be too much effort for no reward. This is where refer-a-friend discounting comes in – offer a deal to both your existing customer and to the person they refer – and voilà, a new warm lead!
Create a sense of urgency!
This strategy, also known as FOMO marketing, is ideal for when you have specific products that you need to move – and quickly! There are several ways you can do this: mailshot your email marketing list with a ‘ONE DAY ONLY’ sale announcement or, even more effective if you’re targeting Millennials or GenXers, use a mobile coupon platform like Nodat to advertise deals on an hourly, daily, or weekly basis. One of the benefits of this approach is that you’re directly targeting people who are looking for deals!
Pro-tip: increase the power of your mobile coupon by sending a mailshot to your email list the day (or the hour!) before the coupon is launched to let them know it’s coming. This way, your coupon will be seen by both existing and new potential customers.
Be in tune with your sales cycle
Make sure that your sales are working for you by analyzing your sales cycle and compensating for the slowest periods with targeted discounts. For example, in the restaurant business, weekday lunchtimes might be your slowest periods. This makes them the perfect time-slots for offering time-sensitive discount coupons through a platform like Nodat. Alternatively, if you’re a florist, the summer wedding season might be your boom time for sales, but at other times of the year your business might benefit from a discount-driven boost.
Pro tip: know your target audience, and make sure your discounts are catching them at the right time in their weekly, monthly, or annual financial cycles too! Professionals might be more willing to spend at the very end of the month, right after payday, while students might be more likely to have money at the start of a new term!
Reward loyalty and boost sales through personalized offers
Retaining a high percentage of your existing customers is one of the most powerful ways to drive sales. Studies have shown that it’s between five and 25 times more expensive to attract a new customer than to re-engage someone who’s bought from you before – and that increasing your retention rate by 5% increases your profits by an impressive 25-95%! Rewarding your existing customers can done by something as simple as giving them early or exclusive access to discounts. Or, you could establish a point-based loyalty program.
Pro tip: if you’ve got far too much of something in stock, and even item-specific discounting isn’t moving it off your shelves, put it to work by offering it as a free gift to loyal customers with their next order!
Buy more, get a higher discount!
People love offers so much that they will often buy more if it means they can save more! This could be a ‘spend over $50 and save 10%, spend over $100 save 15%’ campaign. Or you could bundle some items together, selling them at a slightly lower price than both items would cost separately.
Pro tip: if you don’t want to offer permanent discounts, but want to consistently incentivize higher sales, consider a ‘free shipping over a certain spend’ policy.
Follow these tips to make sure your discounting strategy is effective at achieving your sales goals. And remember to track your outcomes after each campaign, so that you can identify which tools are delivering the best outcomes for your business!