Admit it—no matter how bad you want an item, seeing no “free shipping” or a “5% off” voucher at the checkout screen is enough to stop you from buying it outright. In fact, Criterio’s Shopper Story 2020 report reveals that 93% of consumers in the US consider such promos or discounts when they’re looking to purchase something. Furthermore, Statista’s survey shows that 83% of online shoppers have used at least one digital coupon when making a purchase in their lifetime.
So, it’s safe to say that nearly everyone loves a good deal, and that’s why giving customer discounts is an excellent way to boost sales and profits.
That being said, offering discounts can also be a slippery slope—one that’s all too easy to fall off of and get stuck in the proverbial “discount trap.” This is where you offer too many discounts or promotions, to the point where your margins start to erode, and you’re ultimately not making the profit you need to sustain your business.
In this article, we’ll show you how to give customer discounts without sacrificing your profits, with seven powerful hacks, plus a few more tips to help you stay on the right track.
Hack #1: Find the Right Timing
You don’t have to give discounts every single day or on every transaction. In fact, that’s one of the quickest ways to end up in the discount trap.
Instead, focus on giving customer discounts during specific times or for special occasions. For instance, you can make your offerings seasonal, like launching a set of back-to-school coupons in August or giving holiday-themed discounts in December. You can also have regular “flash sales” where everything in your store is discounted for a set period of time.
Just make sure that whatever type of discount you’re offering, it’s not available all the time. This will create a sense of urgency and encourage customers to buy now before the deal expires.
Hack #2: Be Creative With Your Pricing
When it comes to giving customer discounts, you don’t always have to slash your prices by significant amounts. Sometimes, all it takes is a small change in your pricing to make a big impact on your sales.
For example, you can use psychological pricing methods such as charm pricing. This is where you end your prices with .99 instead of rounding up to the nearest dollar. Studies have shown that this can boost sales by as much as 24%.
If you don’t have much wiggle room when it comes to your prices, combining such pricing strategies with small discount offerings can be just as effective.
Hack #3: Upsell and Cross-Sell
You should only give discounts if there’s something in it for you, too. Fortunately, there are a few ways to make sure that happens.
One way is by upselling—offering customers a higher-priced item that’s a step up from what they were originally going to purchase. For example, if a customer is about to purchase a canvas tote bag, you can offer a premium or more spacious one for a slightly higher price with a built-in discount.
Another option is cross-selling, which involves selling complementary products to customers. On your checkout page, you can offer discounts which your shoppers can redeem only if they add another item to their purchase. For instance, if someone’s buying custom blankets, you can give a 5% off their order if they also add a set of pillow covers.
Hack #4: Use It As Way To Generate Leads and Traffic
Another way to make sure you’re definitely getting something out of giving customer discounts is by using it as a way to generate leads and traffic.
You can do this by requiring customers to sign up for your email list or create an account on your website before they can access the discount code or voucher. This way, you can grow your list of subscribers or potential customers, and you can also track how many people are taking advantage of your offer.
You can also provide such offers in return for referrals and social media shares. For every friend or follower a customer refers your shop to, they get a discount code that they can use on their next purchase.
Hack #5: Bundle Your Best-Sellers With Those That Need a Little Help
Got some products that have been sitting in your virtual shelves for a while now? They deserve the attention too! Give them the boost they need by bundling them with your best-sellers.
This type of cross-selling technique is often used in physical stores, but there’s no reason why you can’t do the same thing online. For example, if your comic book themed hoodies are selling like hotcakes but your caps and keychains are gathering dust, offer a bundle deal where customers can get all three for a discounted price.
Not only will this help you unload some of your slower-moving products, but you also get to increase the average order value of your customers.
Hack #6: Target Those That Are High Value, but Low Frequency Buyers
Are there some customers that only purchase from you once in a while? You can turn them into regulars by giving them discounts the next time they buy.
This is a great way to show your appreciation for their business and encourage them to shop with you more often. You can do this by sending them a discount code or voucher through email or social media.
You can also include such offers in your loyalty program. For every purchase they make, they rack up points that they can use to get discounts on their next purchase.
Hack #7: Get Others to Foot the Bill
Discounts don’t always have to come out of your pocket. There are a few ways to get other people or businesses to foot the bill, so to speak.
One way is by partnering up with other businesses in your industry or your niche. For example, if you’re a content creator known in the beauty and fashion space and you sell merch like bags and empowering statement shirts on your site, you can team up with a local makeup artist or a small cosmetics brand.
They can offer their products or services to your customers at a discount and, in return, you promote their business to your audience. It’s a win-win for both parties!
Some More Tips on Giving Discounts
With those seven hacks, you should have a pretty solid idea of how you can give customer discounts without sacrificing your profits. But before we wrap things up, here are a few more tips to keep in mind:
Test, Measure, Analyze and Adjust Your Discounting Strategy
Just like any other marketing campaign and business strategy, you need to constantly test, measure, analyze and adjust the way you give customer discounts. You won’t know what works and what doesn’t until you try it out for yourself.
And when you do find a discounting strategy that works, don’t be afraid to adjust it as needed. The goal is to find a system that strikes the perfect balance between generating more sales and profits without compromising your bottom line.
Choose Your Shoppers Wisely
Aside from finding the perfect timing when to give discounts, you also need to be strategic about who you give them to. Not all shoppers have the same buying habits and you need to take that into consideration when creating your discounting strategy.
For example, first-time shoppers are more likely to respond to a discount than those that have been shopping with you for a while. That’s because they need that extra incentive to buy from you. On the other hand, regular or loyal shoppers are more likely to purchase even without a discount.
You can segment your email list and target each group with a different discounting strategy. This way, you’re able to give each shopper the type of discount that they will actually respond to.
Be Wary of Deals Fatigue
Also called “Groupon fatigue“, deals fatigue is when people start to feel swamped or overwhelmed by the number of discounts and deals they’re bombarded with on a daily basis.
This is especially true for online shoppers who are constantly being bombarded with emails and social media ads from different brands and businesses.
To avoid this, make sure that you’re not giving out discounts too often. Space out your discount campaigns and make sure that each one is special and unique in its own way.
In other words, don’t turn your discounts into a mere gimmick. Otherwise, you’ll just end up turning people off and they won’t bother taking advantage of your next offer.
Make Sure You Are Getting the ROI You Need
If you’re shelling out a lot of money to give customer discounts, you need to make sure that you’re actually getting a good return on your investment (ROI).
To do this, track the results of your discount campaigns, and compare your KPIs (key performance indicators) before and after each program. This way, you’ll know when you should continue with a certain strategy, or when it’s time to try something new.
Look for Ways To Incentivize Your Shoppers Other Than Discounts
Discounts are not the only way to incentivize your shoppers. There are other ways to show your appreciation for their support and business.
For example, you can offer to feature them on your social media channels, give them a shoutout in your email newsletter, or offer loyalty points that they can use to get discounts on future purchases. You can also give them exclusive access to new products, your newsletter, or VIP customer service.
The important thing is to get creative and think outside the box. There are endless possibilities when it comes to showing your appreciation for your customers.
Make Shopping More Fun Without Draining Your Profits!
Discounts are pretty enticing and oftentimes, they’re a surefire way to get people to buy. But as a business owner, you should know when and how to give them out without sacrificing your bottom line.
By following the tips above and getting creative with your discounting strategies, you can definitely make shopping more fun for your customers and constantly attract new ones without draining your profits. All it takes is a little bit of planning and strategy! (*winks*)