Surprisingly men do it more often than women.
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‘But it was a bargain.’
These same principles can apply to your own online store. They are a great way to drive traffic to your store and increase brand awareness. Yet they should be used sparingly and only after you have established a solid pricing structure. Used recklessly, discounts can damage your brand image as well as your back pocket.
Before we dive into our favourite kind, let’s explore some pros and cons of using discounts to attract customers.
What works best for you?
As you probably know by now, every part of running an online store is a learning experience. It’s ok to make mistakes! Trial and error, you need to see what works and doesn’t work for you.
The same principle applies when offering a discount. Our best advice is to crunch some numbers and ask yourself some questions.
Using a marketing tool like Metrilo you’re able to see customer loyalty and behaviour after using a certain coupon.
This means shop owners can see which coupons bring them loyal customers and which don’t. They see CLV, AOV and so on of the cohort to best measure the results of the coupon long-term.
Amy of FandomCreations has mastered her discounting method. Rather that discount a single product, Amy will give an overall discount or free shipping.
‘If sales are going well for the month, I tend to give a larger discount.’ explains Amy. ‘If I’m trying to drive sales because I need to get things moving, I’ll give a smaller percentage. The customers are still getting a discount and I’m still making profit.’
Look at your profit margins. What kind of discounts can you afford to give? What products can be discounted? Are you discounting a product that’s already selling well, or discounting it to move more numbers?
Look at your goals. Why are you offering a discount? Is it to drive numbers, to move more stock or keep customer loyalty? How will you advertise this discount? Can you financially afford for a discount campaign to go wrong?
A normal situation when figuring out how much you can afford to discount.
If your profit margins can absorb a little experimenting with discounts, it’s time to pick your favourite!
Weekly sale discounts
These are the kind we see everywhere. Quick and simple sales used to meet targets and move discontinued products or stagnant stock. Think of midweek and weekend sales. A sense of urgency is increased with phrases like ‘Hurry, ends Friday’. Quite often these kind of sales are percentage based and apply to a certain kind of product (eg, 25% off all women’s scarves).
PROS-Simple, easy to organise. Can be focused on one kind of product.
CONS- If done too frequently, can do damage to your bottom line and brand image by reducing ‘exclusivity’.
Every week, Ishka will discount a wide range of products to encourage sales.
Bulk buys/price breaks
How often have you thought ‘Ohh I just need to buy one more thing and shipping is free’. This upsell strategy is a sneaky way of increasing the average cart spend per shopper.
Look at the average spend per customer over the last 2 months. Add 10-15% to that and now you have your free shipping threshold price. Practicalecommerce had in-depth on how to use free postage to your advantage.
PROS- Increase in average cart spend, can be an incentive for a buyer to buy both products if they can’t decide on one.
CONS- Requires constant adjustment to not dig into profits. Free shipping on small products isn’t necessarily a benefit.
thegroomedmanco have a physically small and lightweight product. Free worldwide postage.
New Year’s, Boxing Day, Easter. A special offer during or in the lead-up to a special occasion. Gift giving holidays are a great time to use this if you know customers like to use your products as gifts to others.
Bonus tip: [bctt tweet=” Engage a new audience by offering a discount during holidays unique to that country or culture.” username=”@shoplo_com”]
PROS- Used alongside the right product, holiday sales can move a serious amount of smaller, cheaper, ‘stocking filler’ gifts.
CONS- Consider the time and effort that you will invest in after-sale customer service and returns if your product is gifted out frequently.
Marina Home Interiors celebrate the end of the Ramadan Kareem holiday by offering a discount.
Exclusive social media discounts
Reward followers of your social media pages by giving them access to exclusive discounts. We have found that posting a picture with a discount code (then removing the post after a certain time frame) works best! We discuss this in depth in our Snapchat story.
Advertising any discount to social media followers is also a good way to move some product quickly. FandomCreations owner, Amy relies on her heavy Twitter following to get her promotion out.
‘My followers seem to love my work so I’ll always go to Twitter first. Hashtags are important to get the word out for people who aren’t following you!’
PROS- Increases buyers to follow and engage on social media.
CONS- Requires an active social media fanbase.
Chelsea Truck Co. saw a rise in sales after posting an image with a unique code to their Facebook page.
Abandon carts can really hit sellers where it hurts- and research suggests it happens a lot. Your sale is so close, yet it went away at the last minute. Combat this with a well thought out email marketing campaign.
Once a cart has sat abandoned (inactive) for a set amount of time, the potential is sent a code to entice them to commit to the purchase.
PROS- Nearly two-thirds of your buyers abandon their cart. Engaging these abandoners and turning them into sales should make a massive difference to your sales.
CONS- Buyers can intentionally ‘camp’ (be inactive) and wait for your discount to come to them.
Newsletter subscription discounts
A lead subscribes to your newsletter and is rewarded with a discount for their first purchase. A fantastic way to grow your subscription base and gain new buyers.
By providing a reward for subscribing to your newsletter you increase the likelihood of a sale and gain an email and the opportunity of a follow up sale.
Often seen as a floating popup upon arrival, they should be designed with a clear CTA (call to action) button.
PROS- Your subscription base grows and emails are potentially seen by more people.
CONS- Does not necessarily keep customers.
Lincraft offer a 10% off your first order when you subscribe to their mailing list.
Pre-launch discounts can be used to gain brand awareness before your brand has even been launched. This can also apply when releasing a new product into your range. We like to use pre-launch discounts as part of a pre-launch campaign.
PROS- Can generate a lot of attention around your brand or product before it even launches.
CONS- Customers may view it as a ‘gamble’, buying something before its functionality or quality is known.
Even tech-giants Samsung offer an incentive to pre-order. In this case, its a free VR headset.
A positive review from a trusted family member to another does a lot more than any 5-star online review can.
People are more likely to buy from you if their loved and/or trusted ones put in a good word for you. Encourage the likelihood of someone mentioning your brand to another friend. Try offering a discount to the person referring, the person being referred- or both.
PROS- Can potentially create a return buyer and a new customer.
CONS- Heavy discounts of this kind can hit the bottom line hard.
BONUS – Want to take the next step with referral marketing? Check out Omnistartell.
Leonisa Lingerie reward you with $20 off and 10% off to a friend that you refer.
First-time shopper discount
Like a referral program, offer a first-time buyer a discount. This can be a code in a newsletter or a popup activated the first time the page’s cookies are downloaded. A recent survey by VoucherCloud says that 57% of first timers will commit to a purchase when you put a discount in front of them.
PROS- Can be the gentle nudge needed to turn a watcher into a buyer!
CONS- Can be exploited by someone with multiple email addresses.
If you’ve decided to use discounts, be weary. You’ve entered the realm of competing in price. If your product isn’t already being scrutinised at the finest level, it will be now. After price, a buyer usually looks at build quality. If your price is attractive, you need to make sure the design and quality of your product can compete against the more expensive competition.
When it works, don’t forget to celebrate like Amy!
Used correctly, a well thought out discount strategy can really give you the edge in a flooded market. 5% off or free shipping is all that can be needed to make a buyer click ‘purchase now’ in your shop and not a competitor’s. Just make sure that only one code can be used at a time!
What discounts have worked for you in the past? Be sure to let us know in the comment section!