Who doesn’t love to save money? If you shop around for the best deal, search for coupons, or wait until there’s a sale before you buy, you’re not alone!
But as a business owner, your main concern is making money. On the one hand, people are more likely to buy—and buy more—when items are on sale. But what do those discounts do to your bottom line? And public perception of your business?
When used correctly, discounts can help improve your business and increase your profits. Here’s how to run sales, discounts, and offers so that you and your customers both win.
There are several reasons you might consider offering a discount on your products and services. First, they drive traffic to your website. While customers may initially come to check out the sale, they may explore and purchase other pages or products. It’s also a great way to attract new customers. Seeing an ad for a sale may encourage someone scrolling through their social media page to visit your website for the first time. Even if they don’t make a purchase right away, they are now aware of your brand and may make a purchase in the future.
However, there are some disadvantages to offering discounts. Studies have shown that customers believe discounted items are inferior to full-price items. The steeper your discount, the more likely customers will question why you are willing to sell it at such a reduced price. A price drop can indicate that the item has not sold well and left you with surplus stock.
Offering large discounts too frequently can also impact your profit. Sales and coupons might bring in large amounts of customers and encourage them to buy more items, but if large quantities of items are being sold for less than it costs to make them, your business won’t make more money than it spends. You may also inadvertently train customers to wait for sales instead of purchasing items from you at full price. Even if you don’t start losing money this way, your profit margins still won’t be as large as they could be.
Like most other things in life and business, learning to run discounts that engage customers and still make money is a balancing act. When you offer discounts, how you offer them, and to whom you offer them can mean the difference between a wildly effective marketing strategy and a hit to your bottom line.
Linking your discounts to major events or holidays is a highly effective method of driving traffic to your website and boosting your revenue. Most seasonal sales coincide with times of the year when people are already increasing their spending, such as the start of a new school year, the beginning of summer, or popular times for giving gifts like Christmas or Mothers’ Day. Customers expect companies to run sales at these times and will be on the lookout for the most competitive deal.
You can use limited-time offers to create a sense of urgency and spur customers into action. FOMO—fear of missing out—is real, and when people believe something is limited, it becomes more valuable. If customers were already thinking about purchasing the product, offering it on sale for only a limited time can give them the nudge they need to finally make the purchase now before the deal expires. Including a timer on your webpage can increase urgency. A flash sale is a sale you announce last minute and only runs for a very short period, usually only a day or two. They can attract customers to your site to check out the discounts and lead to a surge in sales.
Upselling is targeted at customers who have already bought something in the past. They already know of your brand and liked you enough to make an initial purchase, but you want to ensure they make more purchases. One way to do this is to offer another product at a discount when the customer checks out. If they spend a certain amount of money, they might be able to purchase an additional item for a steep discount. If they are just below the minimum purchase, this might push them to spend even more to get discounted gifts. You can also offer free shipping for customers who spend a certain amount of money or send an automated marketing email with a coupon towards a future purchase after they finish shopping.
New product drops are always exciting. You can help to hype up the new offering by offering a presale for a limited number of customers at a discount. Customers will be the first to get the item when they order presale. People love to be first, especially when it comes to owning a hot or trendy new product. You can either set a cutoff date for customers to reserve their presale or make a limited number of items available. This helps create scarcity and increase the perceived value of the item. Those who miss out on the presale will feel more pressure to buy the item when it is officially released at full price.
You want to stock items that are going to sell well and turn a profit. If you have items sitting on yourselves gathering dust, you have less room for the products that will bring in money. If those products are not attractive to people at full price, putting them on clearance for a steep discount can get them out of your inventory and make room for more profitable merchandise.
A loyalty program gives frequent customers a way to earn discounts through repeated businesses. To sign up for your loyalty program, customers provide you with contact information so you can add them to marketing lists. In return, for each dollar they spend at your business, they can earn a certain number of points. Once they accumulate enough points, they can trade them for free gifts, upgrades, or money off a purchase. Most loyalty programs also offer customers a free gift or a coupon on birthdays.
What’s the difference between a member of your loyalty program and a VIP? Someone can be a member of your loyalty program and still not spend huge amounts of money at your store. For example, maybe they buy something every other month and come in to redeem their birthday coupon. VIPs consistently spend large amounts of money at your business. A tiered loyalty program allows you to offer exclusive discounts and previews to your loyalty program members who go above and beyond. Rewarding them for their loyalty turns them into champions for your brand who bring in new leads.
In e-commerce, your business webpage is your storefront. A slow, hard-to-navigate, or poorly designed website can kill your business even if you’re offering killer sales. At BHirst Media, we build attractive, high-performing websites customized for your business. We also offer website maintenance and support so you can focus on running your business. Ready to build a website that converts visitors to customers? Schedule a call today!