Maximizing conversions is a key part of any retail strategy, and there are lots of methods out there. Marketers are trying different tactics like affiliate marketing, free trials or subscription models to boost revenue.
One method you can’t ignore is discounting. Not only can discounts boost sales, but offering discounts can be an effective way to reduce old stock or out of date products. You can also increase customer loyalty by offering timely and significant discounts. This, and your customer service options, can be considered when setting up a call center for your business.
To benefit, you need to plan ahead and use the right tactics when applying discounts. Too generous or too frequent discounts can hurt your brand image. You want to connect the right messages to the target audience.
Improper use of discounts can threaten the perceived quality and value of your product. It can also reduce sales, as customers become conditioned to wait for prices to drop or simply expect items to always be on sale.
Since discounts are not a one-size-fits-all solution, let’s take a look at how you can craft discounts to work for your brand.
Understand Why You’re Using Discounts
When setting up an e-commerce store, you must have a plan for how you will use discounts in your business. At first glance, discounts can seem a strange proposition for a business – after all, it’s basically saying you’ll willingly make less money per sale.
Of course, a decreased price could lead to increased demand. If the increased demand is high enough, then the business profits go up. But discounting does not work linearly. You can’t expect to continually increase sales by reducing prices indefinitely.
The ultimate goal of any discount strategy is to increase conversions. But there is more to a promotional plan than that.
The first question you need to answer is, why are you offering a discount? Is it because you’re discontinuing a product or a service? It could be that you have an excess of stock. You could be in a price war with the competition. Or is it to generate buzz about a new product? You could be looking to gain new customers or build customer loyalty.
It’s important to know why you are slashing prices before you can move onto the next step of building a strategy. With that in mind, let’s take a look at seven great strategies you can implement.
7 E-commerce Discount Strategies
Most consumers expect seasonal sale offers, after all the holidays are a great time to go shopping. Take fashion retail for instance. People look forward to discounts during the winter holidays or back-to-school season.
As an e-commerce store, don’t be afraid to offer a promotion before traditional sales begin. This will allow you to jumpstart your sales before the competition. You may gain more conversions because impatient shoppers will buy from the early discount provider. This ASOS offer is getting ahead of an approaching winter season.
Seasonal discounts can also be useful when used out-of-season. This can help you clear out old stock. One example would be marking down summer camping gear at the end of the season. Of course, the discount must capture the interest of the customer, so make sure it’s on good products. Offering value will help gain leads and convert consumers who would otherwise have waited until the next summer.
Flash sales are offers that run for a limited time. They play on the scarcity principle. That is, “here’s an offer, but in a short amount of time, it will be gone forever.”
Image Source: Hubspot
This flash sale from hype shows that you can also offer a limited amount of discounts to guide the consumer on the journey to conversion. This applies the same concept of scarcity as a limited time offer.
Flash sales should be available to anyone who visits your e-commerce store. Highlight it with advertising, like a banner that stays at the top of the site. If you’re a Shopify customer, you can use Shopify themes to guide your customer’s attention to the flash sale on your site.
This strategy helps to generate a sense of urgency. If the offer is significant, the deal will convert sales for an item customers weren’t necessarily looking for in the first place.
If you’re in e-commerce, you’re well aware of the nightmare that is cart abandonment. According to the Baymard Research Institute, nearly 70% of online shoppers add items to their online shopping cart and leave before completing a purchase.
Image Source: Baymard
There are many reasons that customers abandon while shopping. A huge issue for many is the additional costs of taxes, shipping, or other expenses not apparent until the checkout process.
While some of these issues (like website errors) can be addressed by better e-commerce website maintenance, others require more focused tactics. A gentle way to do this is by sending a reminder email. This can be effective when a user gets distracted or otherwise abandons a purchase they actually want to make.
It’s common for users to leave to try and find a better price. To combat this, send a reminder that includes a discount offer. Free shipping or a one-time voucher can sweeten the deal. If you offer even a five or ten percent discount, that can be more than enough to nudge a cautious buyer further down the funnel. Sixty-three percent of consumers say they will reconsider an abandoned cart if offered a coupon.
Bear in mind for these discount offers, you will need the email address of the customer. For returning customers, you should have their account information at hand. Include an email form early in the checkout process to ensure new customers get this special offer.
When a telemarketer is making an outbound call, the customer can abruptly end the interaction. But don’t let call center problems parallel yours. In e-commerce, you have more weapons at your disposal.
Once a customer has left your website, there is no guarantee they will ever return. So why not try and stop them? Be careful: exit-intent popups must be used strategically. You don’t want to condition customers to attempt to leave in order to generate a discount offer.
There are several ways you can implement discount popups. This exit-intent popup from Gap can be incredibly effective as a tactic for first-time visitors. Not only do you tempt them with an offer, but you capture their data at the same time. A small offer can go a long way in generating a lead – and a sale.
New Customer Incentives
Studies by Vouchercloud show that 57% percent of shoppers complete a first-time purchase when they can redeem a promotion. When your e-commerce store gets a new visitor, it’s vital you make a good first impression. There are many ways to do this. You could offer free shipping or a free gift. Another option is to offer a one-time promo-code. Make the promotion available to customers who create a new account or sign up for a newsletter.
Even if the offer does not lead to an instant conversion, you now have the ability to market to that customer with promotional emails and sales letters. This will give you more opportunities to expose the customer to your sales funnel. More opportunity increases the likelihood of more conversions.
Even with a large amount of face-to-face social interaction moving to a screen share in 2020, the influence of others still plays a role in our purchasing behavior.
If you’re an e-commerce business, you already know the importance of social media. It’s a great space to leverage conversational marketing. Most of your target market is likely to be on social media, and they may well already be talking about you.
Take advantage of this and make a small discount offer in return for a social media post. This free marketing can be invaluable. The lead generation potential is worth far more than the discount.
Another option for offering a discount can be using a referral based program. Airbnb began using its referral offer years ago. Customers who want to earn savings or future credit will happily influence their social circles. Think of all that marketing you’ll receive only for the cost of a discount code. Just make sure it’s contingent on a completed sale, or you’ll be out of pocket very quickly.
To really benefit from social media conversions, make sure to optimize your mobile site. If someone can’t access your store, they can’t buy anything. There’s a bunch of great options to evaluate how users navigate your site. Heatmap tools are a great way to experience your site the same way your customers do, making it an excellent resource when it comes to boosting conversions.
This is the final strategy we will go over, but arguably the most important. One of the most important phone sales tips out there is to listen to the customer. In e-commerce, one way you can “listen” to your customers is by offering a membership or loyalty program. They get discounts, and you get the ability to track your customer’s buying habits.
Long-term customers are the most loyal and most valuable. Having a program in place to reward customer loyalty will strengthen the bond between your company and the consumer. You could give discounts during their birthday week, free gifts after a certain amount of purchases, or upgraded shipping.
Loyalty programs are great for improving customer retention, which will have a customer lifetime value far greater than any discount you could offer.
You can also use a paid membership program like Go Outdoors, wherein members get special offers, gifts, or first refusal on new products. Because members have invested in the membership program, they will be more likely to stick with your business over finding a new one. Just make sure you keep the offers coming.
When it comes to rewards they’re also great for combating negative press. Say, if a customer goes to your customer service desk to vent their frustrations at your store. It happens, we all make mistakes. These situations can be managed by having a clear customer service strategy and using tools like RingCentral’s virtual switchboard to make it easy for customers to contact you. And once they air their grievance, listen, provide a solution, and then a reward. Like a cherry on top of a Sundae.
Rewarding new customers will encourage sales and reduce cart abandonment. Rewarding loyal customers improves customer retention and reduces churn – something key to maintaining a business in the long run.
Go back to the initial question of why you want to implement a discount strategy. Is it to increase customer conversions? Clear out old stock? Promote a new product?
With so many strategies available, you need to choose one that matches your goals. Every company is different.
Choosing the right strategies for your brand image, industry and target audience can bring a temporary sales boost. More importantly, it can attract and retain more happy customers – producing greater customer lifetime value. That means you don’t just get a spike in conversions, but a steady increase and a successful business.
Sunny Dhami, RingCentral UK
Sunny Dhami is the Senior Director, EMEA Product Marketing & GTM for RingCentral a Global VoIP, video conferencing and small business phone system provider.
He has extensive Marketing experience across SaaS, Telecommunications and Technology sectors within companies such as Vodafone, Reed Elsevier, Calor Gas and SapientNitro. Sunny has also written for websites such as Hubspot.