Tips for Using Coupons and Discounts, without sacrificing profits
Coupons and discounts are used by businesses because they attract customers and make them want to shop with them instead of the competition. However, using coupons and discounts too often, or in a manner that is not properly executed, could permanently eat into profit.
JC Penney used to run some sales that seemed to be permanent. Customers loved feeling like they got a good bargain. However, since the shop was offering nonstop discounts that customers came to expect that. Therefore, when the store switched its tactics and offered limited discounts, shoppers reacted. The business still hasn't fully recovered from the saga.
It is important to note that couponing and discounts need an amount of money.
If you're a proprietor of a shop You want to draw clients, however you do not want to sacrifice profits particularly over the long term.
Here are eight methods to utilize coupons and discounts without giving up the earnings.
1. Encourage a repeat purchase from customers who are new to you.
If you think about the purpose of coupons for new customers, it becomes clear that it's a lead-generation tool. The goal of a coupon isn't to make one sale. It's to win a customer so you can continue to sell them.
How do you encourage to make a purchase again?
A good way to do this is by giving them a second coupon after they have made a purchase as a way to thank them for being an incoming customer. You can make this coupon a lower amount, or require a higher purchase price to use it, such as "spend $100 or more to save 20%."
Another approach to motivate another purchase is to convince customers to join to your mailing list, and start emailing or texting them. Through email, you are able to inform the customer of your products and services and how you can solve their issues, and what you do to bring them joy or any other benefit that you can offer. All this can be done with no discounts whatsoever. Stay on their mind as they're more likely to return to the store.
MailPoet offers the necessary tools to build a welcome mailer sequence that will allow you to begin the process of nurturing and follow-up for your clients. process.
2. Tiered coupons are better than percents
In our last article, we discussed the strategy of offering 20% off on purchases of $100 or over. Think about the advantages this kind of discount structure can bring to you. What are the most common actions customers take? You'll have to spend more money in order to receive the price reduction.
Similar method to provide tied coupons but not with percentages. Examples:
- Pay $40, and you'll earn $10 back
- Spend $100 and receive $20 in return
- Spend $250 and get $50 back
If you use this type of system you will notice that the amount the customer will receive is a single number, even though they pay over the amount required.
A customer, for instance, spending $50 gets $10 back which means you get the sum of $40. If a person spends 80 dollars then they still receive $10, which means you earn $70. In the event that their total cost ends up anywhere above the amount of $80, they could be able to increase it above $100, so that they could receive the $20 back instead. Whatever way you go, you will earn more profit.
However, with a flat percent discount your margins remain exactly the same no matter what quantity they spend. If you pay $100, and get 20 discount, it's $80. If they buy $200, the 20% discount now becomes $40.
The flat dollar discount plays out more in your favor since it will increase the an average size order without raising the discount at the same proportion.
3. Utilize a loyalty programme
Although loyalty programs might not be the best fit for every company, they are an an excellent way to create lasting revenues. For one thing, some customers are awestruck by them and come returning to see their rewards increase!
Also, this gives you something to follow up with them over email, because if they don't buy any items for the next few months, it is possible to remind them of how many points they've earned, as well as what they are able to buy with them.
4. Set up a subscription or a membership
Discounts can be extremely effective in the event that you are able to transform them into ongoing revenues. If you're able build a successful subscription system for your company, just about any discount could be economically justified.
Let's take an example. Say you have a $19/month subscription option. If you are able to prove that your subscribers will be subscribed for at least six months in total, this is $114 in recurring income. Would you consider offering a 25 percent discount coupon if someone joined your membership and earned an average of $114 revenues? How about the initial month for only 99 cents?
To motivate customers to join your service, you may do giveaways and much larger discounts. You'll earn the money back, and more. The goal is to lure the customers' attention with a substantial reward, and then continue to provide value so they stay around indefinitely.
A different approach is to provide an offer of a discount on your membership. You could say that anyone who makes a purchase of more than $100 will receive 20% off of their membership. It's still profitable for you because of the potential recurring income.
5. Use product bundling discounts
If you bundle your products it is less about cost and instead focus in the ease you offer your consumers. Bundles can be more enjoyable particularly if you pack they well.
Offer 20% discounts on the bundle of products that provides a great deal to the client and also generates higher profits for you. Why? Your average order value is higher, and your packaging and shipping costs are less than if you offered each of those items individually.
6. Incentivize referrals
Word of mouth is powerful. But it's not always enough but it's also not in the way you'd like.
To reward your loyal customers, provide them with another reason to inform your friends about you. You can give them coupons that they could pass out to their friends If their buddies use them to redeem coupons, your customer can also get a reward.
This is a smart way to coupon as it can bring in a potential customer that you would not normally have reached. Additionally, the existing customers turn to brand ambassadors.
You can send coupons like this by email, snail mail, or text messages. You can also just provide links to landing pages which has coupons available for new customers and ask customers to forward it to their friends.
7. Offer upsells
Best of all, it does not feel as if you're threatening customers, since you're providing the exact product that they have already decided to buy but with a different version of it.
It is possible to offer additional upsells too, including selling your subscription. If you're offering coupons or discounts, you can use upsells to provide the opportunity to recover any profits lost on the same purchase. And if the item you're offering upsells is connected in any manner to what customers are already purchasing, it seems like a natural decision for them as well, and some may be willing to take it up.
8. Have a reason to sell your product
We are right back JC Penney story. They never had a reason for their permanent sale rates. So, customers came to expect , and often demand them.
The way to avoid the problem is to only run sales when you have the need to. You can get creative here. As long as you can justify the price you are charging and your best clients will be willing to take you up with no expectation of that they will come back in the future.
Utilizing coupons and discount codes in this manner increases loyalty and attracts new customers however it does not tie customers into any future expectations for discounts.
The reasons for selling can be found everywhere:
- The celebration of a local sports team taking home a trophy
- We thank our customers for X number of many years of business
- There is a lot of stuff must be cleared
- The holidays
- Discounts for new customers
- Planned to donate a percentage of the sales proceeds to charities
- Profiting from a story in the news that you can relate to your company
Discounts that work and coupons that make sense increase long-term revenue
These ideas all serve all have the same aim -- to thread the needle to attract new customers, without offering too much money or creating price-obsessed customers.
What you want are loyal customers, repeat buyers as well as recurring revenues. Using coupons and discounts in ways that produce one or more of these is usually a smart decision.
Make sure to leave a message in the comments if you are able to suggest any additional ideas!