How Using Discounts Can Increase Your eCommerce Revenue
Using discounts to boost sales has been a tried and tested tactic for retailers since the dawn of commerce. But the advent of eCommerce has made the concept a much more multi-faceted and sophisticated one. It’s not just about lower prices and waiting for a barrage of customers to arrive, It’s about incorporating a discount strategy into your online retail business.
Today, you can create an online store in a matter of hours, and top eCommerce website builders will give you tools to create discount features on your platform. The good news is that you instantly enter an online marketplace with over several billion potential customers. The not-so-good news is that you’ll be competing with other eCommerce websites. Still, there are many ways you can easily make your online store stand out from the crowd; and one of those is with a discount strategy.
The stats speak for themselves: Studies have shown that 64% of American shoppers will wait to buy certain products until they go on sale; around 30% of shoppers use price-tracking services (a growing trend) to receive emails when a product drops in price; 54% will purchase products in abandoned carts if offered a discount; almost 66% of shoppers claimed a discount would seal the deal when they are on the fence about making a purchase.
Below we highlight some of the ways eCommerce store operators can use discount strategies to increase their revenue:
First-Time Buyer Discounts
Offering a discount on a first purchase has a dual function. First, it makes the visitor more likely to buy something on the platform. Secondly, and perhaps more importantly, it brings the shopper into the ecosystem of your eCommerce platform. Retention of customers is the key to eCommerce, and studies have shown that it costs five times as much to acquire a new customer than retain existing ones. Offering a relevant discount is the key to starting a customer on that journey.
Receive Marketing Discounts
Some of the biggest brands in the world, including Tommy Hilfiger; offer discounts to customers who sign-up to receive marketing emails. It’s a clever strategy, allowing them to foment a relationship between the platform and the shopper. Often, these campaigns can be augmented via special offers, such as a special discount offered on your birthday.
Loyalty Scheme Discounts
One of the most effective discount strategies for eCommerce platforms – loyalty schemes, can come in several different forms. One of the most successful is through points programs, which instill a sense of gamification for the customer. Importantly, studies have shown that loyalty scheme discounts increase overall spending.
Early-Bird Discounts for New Products
An intriguing strategy as it creates buzz and demand for a new product. The idea is to give a discount on a time-limited or product-limited basis, say, for example, the first 24 hours that a product goes on sale. The brilliance of the strategy is that it creates a sense of urgency in the purchase – up to 70% of shoppers will leave abandoned carts for days. In addition, it evokes feelings of competitiveness in the customer, allowing them to feel they are getting something that others are not.
Multiple Item Discounts
BOGOF (buy one, get one free) has been a mainstay of shopping for a long time; but its allure has always been a strong one. Of course, you don’t need to offer BOGOF, particularly if your products aren’t suitable for such an offer. There are other ways you can explore multiple-item promotions; including a simple discount taken off the final price when two or more selected items are combined in the cart.
Referral Program Discounts
As mentioned above, acquiring a new customer is a lot more expensive than retaining existing ones. Referral programs take some of the work and expense out of attracting new customers by incentivizing existing ones to do the work for you. A small reward for both the existing customer and the friend they encourage to sign up can create a chain reaction that can exceed even the most effective digital marketing campaigns.
Subscription Discounts
Amazon has mastered this tactic in recent years, nudging customers into paying for subscriptions for products like coffee; and razors by offering a (small) discount, usually around 5%. Again, it is about retention; with the discount ensuring that the customer does not look elsewhere for the product or forget that you offer it.
Conclusion
Above, we have only scratched the surface of how discount strategies can turbocharge the revenues of your eCommerce platform. Of course, you don’t have to implement all of them, and some discount campaigns can be seasonal or part of a one-off promotion. Moreover, you should remember that a discount strategy should not compromise your overall profit margins. If it’s not working, then change tactics. Don’t forget that you can also incentivize your eCommerce customers to make purchases using other promotional tactics such as free gifts or free shipping.
