How can you increase sales and conversions with discounts?

Certainly, determining the purpose and strategy behind offering discounts is a critical step in optimizing their effectiveness for your business. Here are the most popular objectives when thinking about strategically using discounts - Increasing Revenue - Clearing Inventory - Acquiring New Customers - Rewarding Loyal Customers

This. And don't be too predictable. Ever wait to buy something because you know a brand discounts on every major holiday? Don't do this. If you need to move a lot of inventory go big and keep it tight - like pulling off a band-aid (that protects your brand).

I believe that a discount, as a promotion campaign, is not advisable when a new product is being launched. Some do feel that announcing a price discount for a new product would encourage more persons to try the new brand. I do not favour that. When any product is launched, one needs to let consumers understand the price-value relationship that the new product offers. If the repeat purchase is lower than expected, then one could surmise that the value derived from the new product is not commensurate with the price it is sold at. Discounts would hinder receipt of this important feedback for the new product.

Know Your Goals: Before you slap a "SALE" sticker on everything, have a clear idea of what you're trying to achieve. Want to get rid of last season's stock? Or maybe attract new customers? Your discount strategy will differ based on what you're aiming for.

The starting point of every commercial initiative, in any channel, is the activity's objective. Regardless of the objective, e-commerce promotions have the dangerous component of cross-channel conflict. A price too low will hurt the business in brick and mortar. B&M customers being very sensitive to the e-commerce threat will disproportionately react to this and your business may suffer. A rule of thumb is to articulate your objective in a single-minded way and with a language easily understood by any level in your organization. Communicate to express, not to impress.

Tip: Be wary of doing what Comcast (and a lot of other services) do... offering new customers a deal that beats what existing customers get hurts loyalty.

it's important to strike a balance. While it's common to offer better discounts to new customers initially, you should also provide incentives and rewards to retain and continue satisfying loyal customers. Consistently offering exclusive benefits to both segments can lead to a well-rounded customer retention and acquisition strategy.

In my experience, the most effective promotions are in mega campaign days, where the pool of shoppers is at its peak. Any promo ROI is influenced by the size of the total universe (e.g. promoting ice cream during summer) Customer segmentation is most relevant in buying the most efficient media to advertise the promotion and the promo advertising message

Assuming that adopting an ethical and responsible approach is the only way to achieve a long term success, using loss aversion bias in the context of discounts can be a powerful tool for increasing sales and conversions. Loss aversion is a psychological principle that suggests that people tend to prefer avoiding losses rather than acquiring gains. In terms of marketing, we can exploit this bias by offering discounts and promotions in such a way that potential customers perceive that they are "losing" something if they do not take advantage of it. Here's how : 1. Limited time offers 2. Limited quantities 3. Exclusive discounts 5. Use anticipated regret: Make clients imagine how they would feel if they missed the opportunity.

Dynamic discounting based on the customer profiling, especially in Europe, is legally and ethically not really feasible, i.e. the steps needed to put this alive decreases the customer experience resulting in net zero effect in revenues. The dynamic discounting that I find effective, in case your industry allows it, is the supply limited pricing (e.g. last few rooms in your hotel are priced premium).

Routinely measure performance with metrics like CAC, CLV and ROI. Refine based on data to ensure alignment with business goals. For timing, avoid high-cost sales holidays and instead find strategic windows when competitors are quiet but customers are eager. Consider creative approaches like bundling products or offering add-ons to loyal or bulk customers. Thoughtful discounts provide fuel for strong products. But they cannot remedy deeper flaws. Fix any holes in the bucket before pouring in more customers.

Quality Over Quantity: Discounts can be tempting, but don't go overboard. If everything is always on sale, customers won't want to buy at full price. Plus, you risk looking cheap, and nobody wants that. So be selective with your discounts.

Experiment with various discount types, timing, and messaging to determine what works best for your audience. For example, run A/B tests to compare the effectiveness of percentage discounts versus dollar-value discounts. Analyze the results, refine your strategy, and apply the learnings to future campaigns. This data-driven approach ensures that your discount offers are finely tuned to maximize their impact and drive more sales and conversions.

Testing and optimizing discounts is vital for boosting sales and revenue. It's recommended to test one variable at a time for more reliable and precise optimization, even if it takes longer, as this approach can lead to better profitability in the long run. Frequency: Try offering discounts weekly, monthly, or quarterly. Durations: Evaluate the impact of short-term and long-term discounts. Discount formats: Explore percentage, fixed-dollar, BOGO, or free shipping offers.

Discounts are a great way to get incremental conversions. But it helps to ensure communication of value first. Transaction (sale) happens when 'value' > 'asked price'. So for the sale to occur, reducing price isn't enough if the value isn't being communicated adequately.

Be Creative: Discounts don't always mean cutting prices. You could offer free shipping, a free gift, or loyalty points. It's all about adding value in a way that makes sense for your business and appeals to your customer.

Offer discounts that provide additional benefits, such as free shipping or a complimentary gift with purchase. Create a sense of urgency by using limited-time offers or countdown timers to encourage customers to make a quick decision. For instance, promote a "Buy One, Get One 50% Off" deal for a weekend sale, enticing customers with both value and a deadline for action. This combination of added value and urgency can drive more immediate conversions and boost overall sales.

Be aware: Discounting is the easy way out, especially if the heat is on to hit short-term forecasts. Use the pressure to get creative. Would you ever buy full price at GAP or Macy's? Consider shifting the language to a $ gift, a gift with purchase, free shipping or anything that is grounded in adding value vs. percentages off.

Due to their dependence on cash flow generated by e-commerce, most DTC brands suffer from discount fatigue. The use of serial discounts can negatively impact the profitability of other channels if they manage multichannel sales points. If they manage multi-channel sales points serial discount can harm other channels profibility.

Measure to Improve: Always keep track of how your discounts are doing. Are they boosting sales or hurting profits? This data will help you fine-tune your strategy and make your next discount even more effective.

Don't overuse discounts to the point where customers expect them all the time. Instead, strategically time your promotions for key events like holidays or product launches. For instance, a clothing brand can offer a "Summer Wardrobe Refresh Sale" in June rather than running constant sales throughout the year. By maintaining a sense of novelty and anticipation, you can prevent customers from becoming immune to discounts and keep them engaged and eager to buy.

The prevalent challenge emerges – the inclination to prioritize discounts over value-added selling. Across various e-commerce network categories and digital teams, there often exists a pervasive pressure to constantly provide additional discounts to customers. While discounts have their place in marketing strategies, overreliance on them can undermine the development of a robust value-added selling approach.

Important: Track the LTV and purchase frequency of customers who buy with discounts (and those who don't). You need to know if discounts are a strong path into your brand OR whether they train customers to only buy on sale.

An important factor to consider is setting limits or end dates for discount codes! If not, those code may end of up coupon code aggregators & used outside of the user intent for which it was designed.

Use discounting strategies with caution. Winning revenue through heavy and ongoing discounting is not a sustainable practice. Before relying to discounts as a conversion driver, make sure you have exhausted all other best practices or tools available to you for conversion.

Every brand owner knows that there is a percentage of customers that simply leave their cart full and change their mind. Use discounts to force them to stay around! I treat this similar to exit intent popups. Offer a special discount ONLY for these customers that are set on leaving your site. You will capture a large percentage of them because they will feel like now it's a good deal.

Developing a comprehensive system to measure the trade-off between sacrificing profitability and gaining additional revenue following a discount campaign is of paramount importance in crafting a sustainable and effective pricing strategy. Despite the profit margin can be decreased, the nominal profit volume should be kept after discount campaigns.

Discounts can be tricky because you run the risk of de-valuing your product in the eyes of your customer (e.g. it's not worth X, it's worth X minus %). The strategy I tend to lean towards either changing the "perceived value" of the transaction with a GWP that has value OR applying the discount to a less tangible item like shipping. Ideally you've built the pricing structure such that you've got flexibility to lose some margin on a sale Also be wary of offering discounts too frequently, you may train your customers to only shop when there's a discount!

There are some tried and true mathematical models to help identify optimal discounts for a given objective. Don't be afraid to pull in a person or team with expertise to give you a few scenario options and clear forecasts. The money you spend on intelligence up-front will always pay off in avoiding unnecessary or ineffective discounting.