According to studies, customers seem to be spending 25% more money when they have coupons as compared to when they don’t.
You need to understand the psychology of a consumer, a buyer. The best way to do so is to channel from your own buying intents.
What are amongst the topmost priorities when you buy something?
Well, on the financial aspect, we all want to save money as much as possible.
And that’s what a common consumer thinks. Needless to say, how much coupons help you to save money on your purchases.
Also, coupons encourage customers to take actions.
Interestingly, 48% of consumers buy faster when they have a coupon and 37% of people purchase more than they usually would.
Table of contents
- What is Coupon Marketing?
- Quick Steps To Plan Out A Successful Coupon Marketing Strategy
- Effective Ways To Improve Your Coupon Marketing Strategy
- Using Discounts To Lead Sign-Up Forms
- Mobile Coupons Are Really Effective
- Putting Time Limitation To Your Coupon offers
- Optimizing Your Coupons
- Deciding the Type of Deals To Offer
- Start Working With Single-Use Coupons
- Creating A Customer Reward Program
- Promoting Your Coupons
- Track & Analyze Performance
- Types of Coupons
- Disadvantages Of Coupons
- Different Types Of Discount Strategies
- Setting Up Goals Before Deciding Your Discount Strategies
- Successful Discount Strategies For Your Business
- How You Can Make Your Discount Pricing Profitable?
- What is Discount Pricing?
- Regulating Your Margins
- Managing Customer Acquisition Expenses
What is Coupon Marketing?
Coupon Marketing or Discount Marketing is about using the vouchers, discounts, coupon codes and deals to attract and retain customers.
It is the marketing strategy to leverage the customer’s interest in saving money on their purchases.
Coupon marketing helps you brand to gain new customers, retain existing customers and make more sales.
Quick Steps To Plan Out A Successful Coupon Marketing Strategy
Step 1 : Research Before You Make Your Move
You can start to plan out a successful coupon marketing strategy from researching on the current market.
It is important to evaluate the ongoing scenarios in the online retail market to implement the relevant marketing strategy.
You need to analyze what strategies your competitors are using to implement their coupons.
It helps you to understand what is really working within your industry.
Here are these factors you need to focus on while researching :
- An ideal expiration date for coupons
- Value set for coupons
- Type of coupons your competition are using
Step 2: Create Customer Segmentation
Customer segmentation is an integral part of your coupon marketing strategy.
Especially, it is essential you start creating segmentation at the planning stage of your coupon marketing itself.
Start from deciding which segment from your customer you are targeting for a certain promotional offer.
It’s not effective to send one discount offer to everyone. Create customer segmentation dividing your email list into different categories.
Segmenting your customer list helps to improve the rate of conversion. It is to ensure that your coupons reach the relevant people.
Step 3 : Create Occasion-based Coupons
Once you are done with your research and customer segmentation, you need to create coupons based on the occasions.
Delivering coupons on a certain occasions make it more effective and consumable amongst the people.
It is because people are more inclined to buy products on holidays and various events. People expect to get more discounts at times of special occasions.
Occasion-based coupons are a specific type of coupons to use. You can also create customized coupons dedicated to certain events.
Step 4: Track Coupon Performance
Another essential step to plan a successful coupon marketing strategy is to track your coupon marketing campaign.
Tracking the performance helps to see the results you are gaining from a certain strategy.
Using the results, you can change your strategy and optimize it for even better results.
Coupons basically have information embedded to track them, So you will get detailed information on conversions, cart abandonments, impressions and much more.
Step 5: Monitor & Utilizing Coupon Sites
Coupons and promo codes are used on multiple platforms, so tracking helps in monitoring the coupons irrespective of the platform.
Especially, it becomes necessary to monitor the coupon sites where a huge number of customers will be looking for your coupons.
Also, it is a good strategy to place your coupons on various coupon websites to increase the exposure.
But you surely need to make sure you provide the correct information about your offers.
Also keep updating the information related to promo codes such as value, expiring dates and terms and conditions as well.
Effective Ways To Improve Your Coupon Marketing Strategy
Improving your coupon marketing strategy should be the very next step once you apprehend the significance and application of coupon marketing.
Here are some effective ways to improve your coupon marketing strategies and boost sales.
Using Discounts To Lead Sign-Up Forms
Lead Magnets are a highly effective tool to attract new leads for your business.
They are basically incentives that you offer to your subscriber in order to provide you their email address.
It changes depending upon your business type, industry and preferences of your customers.
Various incentives are offered such as ebook, guide, checklist, resources, free access to webinar and much more so the visitor can give their email address for your newsletter subscription.
But undoubtedly the most powerful lead magnet of all time, is discount offers. They work dramatically to convert visitors into your subscribers.
And it’s also better because you cannot expect a first time visitor to just buy a product from you due to your discount offer.
However, that surely does happen a lot if you get purchase-intent visitors.
Using discount offers to get people onboard is basically retaining a potential customer.
It helps you create your own concentrated target audience that offers you way higher conversion than you can usually get.
You can offer them discounts for their first purchase and also promise for sending you more exciting deals if they subscribe.
Pro Tip : Try to make it more exclusive and specially offered to the insiders only. You can also make the offer time constraint to push the prospect a little bit more.
Mobile Coupons Are Really Effective
The Internet is most widely consumed on smartphones.
So it is not assuming that the maximum number of consumers are looking for coupons and exciting deals on their smartphones all the time.
They are constantly comparing prices and looking for better deals.
67% of consumers are most likely to shop for a retailer offering mobile coupons as compared to those who don’t.
One of the most effective advantages to gain on mobile coupons is geofencing.
Geofencing allows you to target customers with more relevant and focussed messaging.
65% of US consumers tend to shop at the retailers who send them more proximity-based mobile coupons.
You need to be more personalized and relevant to your target customer based on their geo-tagging and purchase behaviour.
You have to offer an omnichannel experience to your target audience. Send such shoppers the real-time offers depending upon their buying history, search history, website activities and much more.
Focus on providing a shopping experience that is seamless in different ways.
Make sure you offer discounts and mobile coupons which can be used in stores as well as online.
Also, don’t hesitate to go for the print. Use QR codes at various stores as in-store advertising or marketing. You can also get them printed on magazines.
You can also utilize mobile coupons specifically designed for your mobile app. It will help you increase the engagement within your application, drive more sales.
Create special offers for your mobile application users to attract them.
Putting Time Limitation To Your Coupon offers
Image Source: CrazyEgg
If consumers know that this particular coupon is only valid upto a certain date or time, they will be more inclined to take action towards it.
A limited-time coupons, offers or discount is more effective as it is only available for consumers for a certain time.
Limiting the availability to your offers force consumers to act sooner rather than postponing.
According to studies, 50% of Buyers found such offers to be more appealing than others.
If you have a small business, you can focus on utilizing time-limited coupon offers during holidays, product launches or any special time and event.
This can work really great for you especially if you are at stage trying to attract more and more customers.
Today’s customers are more aware, they research before they buy anything. So what will happen is, they will research on the web and narrow down to few options.
But when they get your offer and realize the value they are getting is more than their alternatives along with the discount, they will surely buy from you.
Focus on making your offer stand out from the competition. So do your own research as a buyer, and see what offers, discounts and deals are there.
Where would you go? And what more you can offer to bring that customer to you.
So look for what more you can provide. And then add a sense of urgency to your coupons, so the consumers don’t get much time to overthink it.
Optimizing Your Coupons
You cannot just create a good coupon offer and expect customers to be attracted. It requires a certain level of optimization and customized approach to really work.
You need to utilize the coupon offers to a certain section of your customers. Remember not everything works for everything.
For example, focus on new customers with your coupon offer. So instead of making it general, make it relevant to target only the new customers at your website.
Make your coupons visible to all the new visitors. This particular coupon will show a customized offer only to new visitors making them engage.
Image Source: Zoutons
For example, Ajio offers accustomed coupons to their first-time customers exclusive to them only.
Your aim is to encourage your customers to purchase again and again with you.
You can offer gift cards, discounts, coupons and deals to re-engage with first time customers.
Re-engaging with customers who have stopped buying from you. It might be due to many reasons but most prominently must be the pricing issue.
Offering coupons helps you to bring back to all those customers. You can segment these customers to lure them in with more customized offers.
Another effective strategy to optimize your coupon marketing is rewarding loyal customers.
Create specialized deals exclusive only for your repeated customers. Offer them a reward program that promises more discounts on their future purchases.
Such loyalty reward programs will encourage them more to buy from you repeatedly in order to get continuous discounts.
Deciding the Type of Deals To Offer
First of all, you need to recognize that there are multiple types of deals, discounts and coupons to offer.
The most popular ones you know are the percentage offers and the dollar amount off.
But your coupon marketing strategy should be limited to only these two kinds.
It’s not necessary that popular types of deals will work for your business too.
For example : You can only offer dollar amounts of discounts if it doesn’t affect your profitability. Don’t offer $30 off for your first-time buyers if it makes you lose money.
There are many alternatives that might fit to your business such as :
- Discounts offered on abandoned carts
- Referral offer discount
- Free shipping
- Free gift on a certain amount of the cart
- Winning contest
If you are all starting out, focus on something simple yet effective, possibly with low risk. See how’s that working for you.
Experiment with different types of discounts, and see how that’s working. Keep adapting to the results you gain from such experiments.
Improve your coupon marketing strategies accordingly and start focussing on what works for your small business.
Start Working With Single-Use Coupons
Image Source: Shopify
You might think that offering standard discounts which customers can use multiple times will attract more customers, and hence it is better.
But it’s not the case!
You need to opt for the single-use coupons that allow you to go for only the targeted offers.
Customers actually prefer the single-use coupons if they ( they usually are) are of higher value in comparison to the multiple lower value offers.
If you are offering a percentage discount offer, to ensure profitability, make sure you mention a minimum order value.
Focus on coming up with an ideal offer value. You neither want over-discounting nor under-discounting as both are ineffective.
You also need to ensure that the coupons must be used only once. Randomize the codes to prevent overuse through coupon copies.
Creating A Customer Reward Program
If your aim is to improve your coupon marketing strategy, custom reward programs are the ultimate catalyst to boost your results.
Rewards programs help to promote customer loyalty. It is a more retainable form of profit you gain from the customers on a long-term basis.
Customer reward program is where you provide exclusive money saver offers to the customers who are consistently choosing you over a competition to buy the products.
Longer the customer stays with your brand, the more LTV (Lifetime value) they have. Also, you get a consistent source of revenue.
It also saves tons of money in customer acquisition, lead generation and consistent requirement to find more customers.
According to the studies, 80% of customers say that they would be loyal to the brand that offers rewards or reward programs.
Now what this all tells you?
It simply states the significance of customer reward programs for a business. And actually it is more important for small businesses. But why so?
Well, suppose if you get successful to achieve a certain number of loyal customers that always buys from you, your business will –
- Gain stability more and quickly
- Have long-term sustainability
- Consistent revenue source
- Be More secure
- Allow you to try new things
In customer loyalty programs, you need to offer special discounts that you’re not giving away to others.
You can also offer free products and gifts every time a customer hits a milestone.
They will also get exclusive updates and early-bird discounts on your newly launched products.
Pro Tip: You can send a thank you package offering a free gift when your customer hits one-year anniversary.
But how will you create an attractive customer reward program?
The very first step is surely to find what your audience exactly wants. What kind of offers and discounts do they really dig in?
Think what kind of offers make them purchase again with a brand. What will be valuable rewards for your customers?
Next step could be to segment your customers into specific groups where you offer a specific program and customized messages.
For example : If you are running a clothing brand, you need to create reward programs customized for men and women differently. So from messaging to the rewards, everything will be accustomed to the certain group.
Promoting Your Coupons
Promotion is essential for your coupons to reach out maximum prospects for better conversions. If consumers cannot find your coupons, they surely cannot redeem it.
46% of consumers search for coupons and promo codes on multiple websites. So you need to make sure your coupons are easily accessible for the prospects.
You can also go for the paid search to promote your coupons. The coupon ads will be exposed to more likely to convert on an e-commerce website.
Create attractive coupon ads highlighting the potential savings a customer might make on opting it. It should show what customers are saving with this discount.
You can do A/B testing by using a different set of keywords, various biddings and copy pieces to see what really works.
Partner up with the coupon websites as it is the place where a potential customer always searches for required coupons.
You can also publish the advertisements in the newspapers and magazines which are still predominant ways to reach massive consumers.
Track & Analyze Performance
One of the most important things to do is track and measure your coupon marketing campaign. It is the only way to find out whether your strategies are working or not.
First step to tracking your performance efficiently is to use only a single platform to do so.
Focus on tracking and managing coupon marketing campaigns through a single effective platform that offers you multiple features and services.
You need access to real-time reporting, customer engagement and advanced analytics to determine the progress and results over time.
It allows you to see how people are responding to your coupons.
Tracking and analyzing helps you understand where you went wrong or what could be done better.
Use unique tracking codes to understand individual purchase habits and tendencies.
You can further see what kind of discounts are working for your campaign. This will help you to focus more on those discounts and optimize your results better.
With an advanced platform, you surely are going to have tons of metrics to analyze.
But focus on only the relevant metrics to quantify the performance of the coupon campaign.
You can look for ROI, number of coupon downloads, conversion rates and other relevant metrics help you to understand the campaign better.
Types of Coupons
Promo codes are certainly the most popular form of coupons or discount offers today. It is due to the contribution of growing popularity of e-commerce websites.
Such coupon offers are easiest to use, especially much easier than those downloadable coupons.
Promo codes are basically the combination of unique numbers and letters dedicated and unique to that particular brand.
This code allows users to get a certain discount during the checkout process. These promo codes can be customized to use accordingly.
They can be of one-time, can be personalized and even be used multiple times to make it shareable.
Downloadable coupons are the kind of coupons that are accessible for the customers from various locations.
They can be downloaded from the brand’s website directly. You can also get these coupons from email or social media as well.
Such coupons are also mostly accessible from your smartphones as well.
There are various e-commerce platforms or online stores focussed to offer mobile-integrated coupons that only work through your mobile devices.
It is basically to promote the online applications of the respective online store or e-commerce brand.
They are exclusive to use only on the mobile application but drives more sales to the brand as they are quick and easy to reach.
Manufacturer coupons are kind of coupons issued by the manufacturers or brands to increase the demand and sale of their product through offering discounts.
These coupons can be commonly seen
Store Coupons are surely not from the manufacturers. These are the coupons specifically issued by the store owners
You might sometimes find them the same but there is a clear distinction between these two times.
Manufacturer coupons are found to be on every store as they are offered directly from the manufacturers, the brand.
Store coupons vary from one store to another. These coupons are created by store owners to offer more discount than any other store and attract more customers.
The sole purpose of store coupons is to make customers buy products from a specific store and get the particular discount.
Get An Item Free
This is a rarely used coupon type where customers will get a one item for free. Such marketing tactic is used to spread the word about a newly launched product.
Surly this is a great deal of benefit for the customers as they are getting something out of nothing.
As the name suggests, such discounts automatically get applied at the time of check-out on e-commerce websites.
Such forms of discounts are also getting popular as customers don’t have to do anything to get these discounts.
Online retailers are themselves offering the discount to reduce the shopping cart abandonment and increase their sales.
It gives a consumer the sense of saving money while making the particular transaction with that discount.
Member coupons are special coupons exclusive available for the members of some group, club or a program.
The member coupons are mostly sent in the inbox of their respective members.
Members coupons are usually very good deals. However, it also leverages the impulse buying of the members to derive more sales.
You can also get email addresses of the new visitors in order to offer them member coupons every now and then.
BOGO means ‘ Buy One Get One free’, which is the most popular coupon discount seen commonly offered by the retailers.
Here you offer customers to buy your one product and you give them another free along with it.
Such coupons help in :
- Clearing the inventory
- Replacing the product line with new products
- Selling the unpopular products along with the popular ones
- Increasing the cart value
Get A Free Item On Total Bill
Rebate coupons help customers to save a good amount of money. But this type of coupon needed to be sent to the brand along with the recipient to get the saving.
Such coupons are commonly seen with the purchase of big consumer electronic items. Rebate coupons are amongst the popular physical coupons in the retail market.
Hang Tags are basically supposed to provide discounts for those products that used to hang.
These products are basically olis, soaps, jellies, two-liter drinkers and others. They were more like style than the actual offers found on those coupons.
Blinkies are the kind of coupons found to be the store shelves offering various discounts.
These kinds of discounts get this name ‘blinkies’ because tiny blinking lights are used to attract customers towards it.
They were mostly popular before 2000s as you see them very less
One of the most common forms of coupons and discounts is Percentage off. Here customers gain a percentage off of the total item of the cost.
Whether digitally or physically, coupons such as 10% off or 20% off are largely seen and really effective to lure customers in.
To get the exact idea on what customers are saving here, they have to calculate the certain percentage of their total cost.
Disadvantages Of Coupons
Despite coupons being one of the most powerful forms of marketing, and having tons of advantages and benefits, you still need to address its disadvantages.
So, here are some cons you need to look out for while utilizing coupon marketing strategies for your small business.
Lower Perceived Value
When coupons are over-used continuously to drive consumer traffic, it devalues the brands and its products as well.
It is very common to see coupons dedicated to selling the close-out or least popular items and mostly the end-of-life products from the retailer.
It is mostly seen as a marketing tactic to move out all the unsuccessful products from the inventory.
Surely, no retailer wants to lower the value of their products or brand.
Still, this negative aspect of value depreciation affects its potential to improve sales in the bigger picture as it often hurts the brand value to a certain extent.
Increase in Cart Abandonment
It is such a paradoxical shift in the purchasing behaviour triggered by the companies offering discounts to actually avoid it in the first place.
Cart abandonment often happens when a customer finds the cost of the products too high.
Then coupon codes are offered from the retailers to retain the customers and encourage them to buy the products in the cart.
But eventually, Brands started a competitive rage to offer more and more promo codes to such an extent that people are too obsessed with promo hunting on the web.
They are actually placing the item in the cart just to abandon it later over other distractions.
Now, even the customers who are going to buy the products anyway without any requirement for a coupon now couldn’t just do it as they feel this urge to look for promo codes online.
The solution itself becomes the very problem it was meant to tackle for, so such a paradoxical aspect right there.
When the sales becomes too much dependent on the coupons and the competition stops becoming a virtue, you see the lines getting blurry with the benefits coupons offer in the first place.
That happens mostly with the repeated customers. Coupon competitions are training the consumers to wait for a better deal.
They are so hooked with the idea of getting a real money-saver coupon discount, that they delay the purchase.
Sometimes, they sit on the idea long enough to postpone for indefinite or even cancelled.
So it just not delays the sales but also decreases the chances of sales to a minor extent.
That’s why it is essential to target only a certain consumer or audience who are far away from buying the product.
When you offer discounts, there is a risk of losing profits from the lower edge of the margins.
Due to offering discounts, you are surely going to get some sales from the people who wouldn’t have bought otherwise.
But you are also going to lose some profits from the people who are going to buy the products anyway even if it doesn’t come with coupons or discounts.
It is most certainly one of the primary challenges if not drawbacks of coupon marketing.
Different Types Of Discount Strategies
Seasonal/ Event Discounts
The even-based discounts offered only around a specific date, event or season are called Event or seasonal discounts.
These are also recurring. All those special big fat discounts offered by the brands during holidays such as New Year or Christmas are even discounts.
Seasonal discounts are actually amongst the most commonly seen discount strategies used by the brands.
They are highly effective as people are more charged up to spend money during holidays with their families.
People are more tuned to their buying intent during these events or seasons.
They already expect to save some money on an abundance of shopping, so giving them attractive discounts can get you more and more customers very easily.
Also, there are some special events when customers get special discounts such as Black Friday, Free Shipping Day or Cyber Monday.
Seasonal discounts also help brands to get profit from their out-of-season inventory.
Buy One, Get One
This comes in the same line of discounting, however it is more on the extreme side where instead of discounting a certain page on a product, you are giving away another item free with it.
According to a study published in Journal Marketing, Buyers prefer to get free items as comparison to the discounts.
It is just more simple to understand the profitability with getting something free rather than figuring out a certain percentage of ‘free’ you are getting in discounts.
It is again quite a common type of discount strategies widely used around.
Buy one, get one is the most effective discount marketing strategy when compared to other versions of it such as ‘ Get one itm 50% off’ or ‘ buy one item, get different item free’ or even money discounts.
You can pair a high-margin successful product with a free time that is less expensive and wasn’t successful in sales much.
There are brands that even go with ‘ Buy 2 Get 1 Free’ as well. Small businesses can really attract impulse purchases through these strategies easily.
It also helps to sell the least popular products. You just have to make sure the bundles you are selling should have enough margin to make the deal profitable.
So, that you still are in profit at the end of the day.
Image Source: Consumer insight
Discount is basically to lower the price of an individual product to lure customers in for effective sale.
Well, rather than lowering the price for one product, you can also lower the price of a group of certain products that are bought frequently together.
You have seen this a lot with skincare or cosmetic brands. They bundle their products in a kit providing various varieties of products required for a customer.
Discounts come in as these bundled items cost lower than if they were bought together individually.
Customers think they are going to buy all these items anyway, so why not get some profit on getting this bundled discount.
Here are some benefits of the bundled sales
Number of Items You Sell Increases : Bundling makes you one sale equals to many. With one single order, it means more items are sold. You are getting more revenue per order here. Even with lower the price, bundled sales overcome the marginal difference.
Customers Get To Try More Variety From You: Even customers buy from you a lot but only the popular products, with bundling, they get to try other products as well. Bundling offers more variety to a consumer from the same brand.
Sell Less Popular Products As Well: Bundling allows you to sell the less popular products or the least purchasing products as well along with your popular ones. Leverage the popularity of your best products to sell the non-popular items.
Bundling requires some learning curve to gain. You need to bundle the right kind of products together to make it work.
There should be an overall balance in the variety, price, usage and popularity of these products.
Free Shipping Discount
Various studies tell how providing free shipping can increase sales for your business. It is also a form of discount strategy popularly noticed around.
High shipping costs are known to be amongst the top reasons why a customer abandons the online carts.
So by offering free shipping, you are also reducing the chances of cart abandonment.
What you have to understand here is that offering free shipping discounts can actually hurt your business, especially if you are working within low margins.
Well to make it then profitable, avail the free shipping discount only when the cart value reaches to a certain amount.
‘Free Shipping for Orders above $50’ – you have seen these plenty of times on e-commerce websites or online stores.
Volume discounts make customers buy more items, even if they are paying less per item. So just like bundling, it scales the value of a particular order.
Such discounts are also quite common. You can find the offers like ‘ Buy 10 Sachets To Get 10% discounts’.
It is indeed like bundling but with only difference is here customers get just more of the same item.
This works for a certain type of product where more of those items should be valuable to store.
If you are looking to clear your inventory quickly, a volume discount is a great option. Also, it is the best if you want to increase the average value of per order.
Prepayment discounts, as the name suggests are the type of discounts offered to customers if they order the products in advance or at an early stage.
You can offer some discount to people who are more inclined to buy your products as they are even ready to pay for it in advance to secure the order.
It helps to maintain the cash flow in the business. It can be really helpful for small businesses, especially if they are starting out.
Basically, you can use the customer’s advance payment to buy more for your inventory, and may be at the bulk, getting yourself a fat discount as well.
However, this doesn’t work with all kinds of businesses. Such discounts are commonly seen with software service businesses ( SAAS) like Dropbox.
Dropbox allows their customer to choose from their monthly and annual billing. But for annual billing, customers get some discount on the total amount.
So this works mostly with products that have recurring payment models.
Setting Up Goals Before Deciding Your Discount Strategies
To Acquire New Customers
You want to acquire new customers for your business or newly launched product, and that’s why you are offering discounts to customers and prospects.
That certainly the primary goal for offering discounts for any brand. So you should be clear on that before you decide your discount pricing and strategies.
Because further down the goal, it will help you decide to go for an effective strategy and profitable pricing.
To Boost Your Sales
Sales are the ultimate goal for any business, and so yours as well. Your aim is to sell as many units of your products irrespective of the number of customers you buy.
That simply means what you need is volume of the sales, not necessarily the higher number of customers.
It also makes the use of bundling products, upselling and other such strategies work wonders for you to sell more items per sale.
To Gain Repeat Customers
Gaining repeat customers is different from acquiring new customers. So you need a different mindset and strategy to cater both individually.
You can offer your customers brand loyalty programs where repeated customers get special discounts.
This is also to encourage them more for future purchases with you only. Loyalty programs are really an effective way to gain repeat customers.
To Clear Your Old Inventory
One of the least popular but very significant goals to offer discounts for a brand is to get rid of their old inventory.
So you might want to clear the inventory so you can bring more new products and update your product line.
It is also important to keep updating your product line and focus on more higher performing products.
Successful Discount Strategies For Your Business
Rewarding Your Loyal Customers
If you have a significant number of recurring customers that must have or should build focus, you need to have a customer loyalty program or club.
A customer loyalty program recognizes the loyal customers that keep purchasing from you on a recurring basis and rewards them.
It is basically a marketing approach to encourage your loyal customer base to stick to your brand.
You must have some loyal customer base already, you just have to recognize them and start rewarding them.
For example: This starts right from those customers who spend plenty of time on your website. You can offer them coupons or special discounts for their next purchase to show them gratitude.
According to a report, 76% of customers would like to receive personalized offers based on their buying history.
So you can also offer them discounts on the basis of their purchase history.
H & M offers a 10% discount as a reward on all of their dresses with an expiration date so customers take immediate action.
The value of rewards depends upon the number of points customers earn. More points simply means bigger reward.
So this makes them buy more and more with your brand.
Image Source: Sleeknote
Apart from this, they also offer free shipping to their loyalty club members as a reward.
This ‘free shipping for loyal members’ is something practical and effective strategy to use for your business right away.
Attract New Customers With Tempting Discounts
It’s really challenging to acquire new customers. You need to have something that pulls the attention right in.
One of the most powerful ways to demand attention from prospects and customers is incentivize them through discounts and coupons.
You need to nudge your new visitors with temping discounts and special offers.
When a visitor enters on your website, they are mostly not inclined to buy or ready enough.
So if you are offering them a special discount to use for a purchase right away, it’s not necessarily the correct strategy.
It is a big leap to take for a visitor. You should start with asking for something smaller.
Your aim should be to sustain that visitor to develop a relationship further.
They can surely go for smaller commitments like giving their email address in exchange of a promo code.
The focus should be to target a new or visitor for a long term relationship.
Pro Tip: Instead of offering discounts, you can also try to sell the value of your email newsletters that they will get in exchange for their email addresses.
Now, here’s how you can make your campaign for new visitor more effective :
- Targeting a specific segment of visitors
Focus on targeting only the new customer, not all the visitors. This discount offer should only appear to a visitor who is visiting your website for the first time.
For that, you have to use a cookie the browsers of new visitors. This will help you track new customers as well as the returning ones.
It will make the offer more relevant, boosting the conversion rates higher.
Personalizing the campaign that dedicatedly targets only new customers, you have to make sure it exclusively caters to them.
You can do that by personalizing the copy for the campaign. The message you put there must be more relevant and speak directly to them.
- Tell them why you are offering discount to them
People don’t just accept the offer all the time. They need to know why they are being offered this discount.
Giving a reason for your discount makes it more credible and impactful. People are more inclined to the decisions to take if they are sure about it.
Make the reason obvious. It works better that way.
Pro Tip: Tell them you are offering them a discount simply because they are a new visitor to your website.
Putting Time Limitation On Your Discounts
The purpose of discounts is to encourage visitors to enter their email addresses and get committed to the subscription.
Putting expiring dates at your discount pushes them to do it quickly.
You need to create a sense of emergency by creating a time limitation on your discounts.
Suppose if you tell your customers and prospects about a 50% discount on their annual plans but it will expire by today. And they have this once-in-a lifetime offer to redeem now or never.
Well, that is something really difficult to ignore. There are various CTAs you can use to create such urgency.
There are also other offers such as a certain offer will be only available for the first 1000 subscribers.
Or you also see products advertised to be limited in the stocks.
All these examples are basically to make customers act faster. Sense of urgency and scarcity are powerful persuasive marketing strategies to use.
Giveaway The Early-Bird Discounts For Your New Products
When you are planning to launch a product, you might suspect how many people are going to buy this?
You want as many buyers to get a newly launched product.
There are a lot of online stores that offer early-bird discounts to their customers on their upcoming products.
To accelerate the sales for a new product, they generate the sense of scarcity in its marketing approach.
They limit their discount offer to only the first 50 orders for their new product.
This way, offers become more exclusive and time-constraint to enjoy the benefit of. It will surely drive more traffic than other discount strategies.
But remember, early-bird discounts should be for newly launched products otherwise it can devalue your products towards prospects.
You have decided whether you will offer a discount percentage or some dollar value. Choose the option which is perceived as the higher value.
For example, 20% discounts sounds higher than $5 off. It is as simple as that.
Offering More Than Your Competition
Do you know what is the most common reason for most abandonment of shopping cards and coupons?
Well, it is their ability to withstand the competition.
The moment customers do some net surfing comparisons, they get better offers or bigger discounts.
Or they are most likely to get word-of-mouth or web recommendation for a better alternative.
When a customer can do basic research, why wouldn’t you?
Focus on giving competitive discounts to your customers, otherwise they surely get a better offer and ignore yours.
Now, suppose you cannot offer a competitive discount. Then, focus more running effective, compelling and irresistible promotions with your existing discount.
Make it more exclusive and time-constrained. Leverage other strengths if not the best offer in the market.
You can also collaborate with other popular brands to leverage them to make your offer more profitable.
For example: Telecom giants such as T-Mobile offer free Netflix subscription for their selected customers. This makes their offer more profitable as compared to their alternatives in competition.
Reducing Abandoned Carts
Sixty percent of online buyers abandon their shopping carts due to unexpected extra cost.
So if you offer discounts to buyers at this point, it will reduce the number of shopping cart abandonment. It will help you to regain the lost revenue here.
It will be more effective to use exit-intent campaigns to offer these discounts otherwise this discount will be expected of, and hence neglected.
So focus on providing the discount to special kinds of customers who try to abandon the cart.
It will also help you to boost your conversion rate.
Pro Tip: You can also offer free shopping discounts on an average cart value. It will boost your average order value and reduce cart abandonments as well.
Retarget Visitors With A Customized Offer
Personalized messages prove to be driving higher sales conversion as compared to the generic copy.
So you need to target your visitors with a custom personal message. You can utilize the emails, advertisements or the on-site messages as well.
You can customize offers depending upon where they are coming from.
If a visitor lands on your website through a Facebook Ad, you can customize on what that visitor will get offered.
This will help you when your ad will lure in prospects to buy through this particular advertisement as then only they will receive a certain discount.
So basically you are segmenting your visitors for exclusive offers.
How You Can Make Your Discount Pricing Profitable?
The most challenging aspect of discount pricing strategy is to ensure profitability.
You have to make sure the discounts you are offering are not hurting your sales, and giving you profit at the end of the day.
But before getting into how you can ensure it, here you get the basic idea what exactly discount pricing is.
What is Discount Pricing?
Discount pricing is a kind of pricing strategy you decide for the discounting of your brand products.
The aim for an ideal discount pricing strategy to boost sales, increase customer attention and clear your old inventory.
Lot of businesses also prefer to have alternative discount pricing strategies to not depend on a particular one for a long time.
Discount pricing is surely marking down your product costs. So it seems to be losing money at one glance.
Also it is not sure that reducing the cost always works. There are various factors in the play to make this strategy work effectively.
Your focus should be to price your discounts in a way that it doesn’t hurt your sales.
Regulating Your Margins
Margins help you decide whether and to how much extent you are allowed to make profit from a sale.
Also, how much that profit will be? Here’s how you can regulate your margins to make your deals profitable
Start From Reducing Your Market Cost
Even if you have a great discount offer to make, you cannot reach maximum people without investing in promotions.
So promoting your discounts is a necessary evil to make it really work. But overspending will affect your marginal profitability.
You will cut your margins due to over expenditure in marketing.
So first focus on making most of it. Target only the leads that are already in your contact such as email subscribers and existing customers to make it more effective.
Reduce your marketing cost for the discount offers to regulate your margin for higher profitability.
Upsell As Much As You Can
Not just the discounted items, you need to also sell all the non-discounted items to the same buyers as well.
How will you do that?
The answer is upselling. If you cannot increase the margins to get more profits on the discounted products, you can at least increase the amount of profit per order.
It will happen when you upsell your other products along with the discounted ones.
You can use various discount pricing strategies such as ‘Buy One Get One’ or the bundled discount offers.
Segmenting Your Offers
To make maximum profit, you need higher conversion or more profits per sale.
Segmenting your discount offers can help you to increase the conversion rates.
It is basically customizing your offer limited to the certain type of customers or prospects.
For example, it is more profitable to focus on the first-time customers rather than all the customers even with repeated purchases.
This will help you increase the chances of new sale conversions without losing profits on the margin on the possible sales that would have happened anyway.
Managing Customer Acquisition Expenses
The amount of what you are spending to acquire new customers changes with every new product offered with discounts.
You can simply compute your customer acquisition cost by adding your lost margins during the discount pricing and your additional marketing cost for promotions.
In an ideal scenario, the discounts should not exceed your customer acquisition total cost. So you need to manage that in order to maintain profitability in your business.
Here are some practises you can do to ensure it :
Focus On Retaining Your First-Time Customers
Whenever a customer buys from your brand for the very first time, your prime focus should be to retain that customer.
Your aim should be to convert the first time customers to repeat customers or regular customers.
That’s how you can spend less effort, time and money on customer acquisition.
Moreover, it will make your high customer acquisition cost more sensible as you will be getting long-term profits from that customer.
So basically, spending the same on one customer to gain, you are benefiting more from them as they are regular.
Reducing Cart Abandonments
Even if you are offering great discounts towards the checking out page of your business, that is a good strategy for sure.
But a lot of online buyers abandon the carts, even before they really reach the discount you are offering.
So you have to make the buyer’s experience seamless and easy to reach them to your discount offer.
You can also retarget these prospects by reminding them about their abandoned carts through emails.
Increase Your Margin Profits On The First Order Of Your New Customer
You need to increase your marginal profit by upselling the relevant products to the same new customer.
What you must understand is the more your new customer will spend in their first order, the more you can cover for your high acquisition cost.
So use multiple strategies such bundling discounts, upselling relevant products and offering buy one get one free offers to ensure high marginal profits.