Shopping is fun, but shopping at a discount is even better. There’s nothing better than filling up your cart, hitting the checkout, entering a promo code, and watching your savings soar. The ability to save big with online shopping is a huge benefit for most e-commerce aficionados, with 92% of customers stating that they’re always on the hunt for a good bargain.
As a retailer, the appeal of coupons and promo codes may be too good to pass up. After all, with 96% of shoppers using coupons, it seems as though there’s no better way to appeal to consumers, both new and old. However, this isn’t exactly the case. Too many discounts can actually harm your brand, compromising the ways in which you prefer to do business and cutting into your margins. Here’s what you need to know about the right way to use incentives in your operations.
The Challenges With Discounts
In many ways, discounts are great. They give customers a reason to shop and absolutely increase revenue: one study found that merchants with an active discount code are eight times more likely to see sales. Further, using discount codes and coupons can increase the average dollar value of a purchase as customers load up on more merchandise to increase perceived savings.
In spite of these benefits, too many coupon codes can tip the scales in the other direction. When you’re constantly applying discounts to your products, you essentially cheapen your brand, reassuring customers that there’s no reason to ever buy full price. In turn, this ruins your margins; when everything you sell is discounted, the effective list price of your products plummets. And once this cycle starts, it’s almost impossible to escape.
Discounts Done Right
Using discounts can offer a boost to your store, but promo codes should come with a strategy rather than introduction on a whim. By using offers and incentives intelligently, you can both increase loyalty and improve new customer acquisition without significant consequence to your reputation or ongoing operations. These tactics can reward customers in a way that still benefits your business.
Have new products or a new line of business in the works? Offering incentives surrounding a new launch can be a great way to build anticipation and spread the word, increasing excitement and tempting sales with the allure of a discount. Consider sending out promo codes that only work on a new release or offering discounts to customers who pre-order new products. You can also consider sales on other items specifically for customers who invest in your new opportunities.
“Out with the old and in with the new” is often the motto of sites that sell seasonal inventory, like retail stores. If you’re one of these, the transition between seasons is an ideal time to bring out discount codes. By discounting last season’s merchandise – or offering a way to save on new season must-haves – you can close out one season with a bang and start off the next on the right foot. Some shoppers even wait for end-of-the-season sales, so giving them a good reason to choose you can inspire an increase in purchases.
The holidays are among the top shopping seasons, with online sales continuing to grow every year. To get your piece of the pie, consider offering promos specific to the holiday season. This can include discount codes for the weeks leading up to Christmas, promotional pricing on holiday gift items, or even discounts on future purchases for those that do holiday shopping with you. Missing out on holiday sales can mean losing out on significant revenue, so pull out all the stops during high sales periods.
Incentives via Gamification
Gamification is fast becoming a buzzword in e-commerce marketing. Referring to the process of using game mechanics in a business setting, gamification covers everything from frequent flier miles to points for purchases. Gamification can be a big benefit for businesses seeking profits, largely due to the customer involvement required to see an advantage. For example, shoppers may need to buy three items to get one free, or accumulate points over the course of a month or two for a discount. By making the process fun and competitive, you’ll be able to cultivate loyal shoppers who will see the benefits in a long-term relationship. From referral bonuses to savings after a certain threshold, there are plenty of ways to make online shopping a game.
Monthly or Weekly Savings
Regular savings can still offer advantages to your business, so don’t ditch discount codes for good (or leave them in the closet until Christmas rolls around). Monthly savings events can still be a good way to drive sales, letting customers know that opportunities for discounted merchandise are still around on a regular basis. Timing sales around month-end can also help you meet revenue goals, inspiring a bump in sales right as the month draws to a close.
Abandoned Cart Offers
All e-commerce sites know the burden of an abandoned cart: a customer visits your site, puts merchandise in the cart, and then leaves, never to be heard from again. While a good portion of these prospective shoppers are a lost cause, some of them can be reclaimed with a persuasive email and a compelling discount. Studies find that approximately 25% of shoppers who abandon their carts do so after seeing the full price, so a good offer may be enough to bring them back.
Operating an e-commerce site requires plenty of patience and a lot of strategic thinking, and that includes your use of discount codes and other online incentives. Too many can cheapen your brand, while too few can cost you customers. These tips can help you avoid overusing coupons while embracing strategies that can drive retention and loyalty. From seasonal sales to the rise of gamification, there are plenty of ways to keep your business on track for success.
About the Author:
Laura Gayle is a full-time blogger who is passionate about e-commerce and the ways technology is helping to rejuvenate the American dream.