Ecommerce Discount Strategy: A Nearly Fool-Proof Guide
Discounts have been part of the selling process since the times our ancestors traded sharp sticks for pretty seashells.
Care for a bigger stick order? Perfect, have a free amber piece for the wife. And now we’re stuck with discounts for good.
To this day, there are a few proven ways to approach discount pricing strategies and freebies. Some big chain businesses think of them as part of everyday routine, while some smaller online store owners decline to use them altogether. Most businesses fall somewhere in between.
No matter what your feelings are about lowering the prices of your products, 71% of customers follow brands for getting discounts, so this trend is too important to be ignored by any store owner.
Let’s dive deeper into the realm of discount strategies to find out how to use them to your advantage to increase your revenue, build customer loyalty, and make your customers feel appreciated.
Table Of Contents
What is a discount strategy?
Offering sales, discount coupons, loyalty programs, freebies, and any other methods that allow customers to save money when ordering from your shop can be considered a discount strategy.
How much of strategy goes into it is up to you. It’s good to think through what you want to achieve by investing in such offers.
What are the types of discounts? One size doesn’t fit all
When it comes to discounting prices, every seller should consider what’s the profit margin they aren’t willing to go below. If the goal of the sale is to clear the warehouse from stock that is no longer desired, then often the acceptable profit is lower than it is in other cases.
If the discount is a permanent perk – such as free shipping or a newsletter subscription bonus – it has to be sustainable long-term and still profitable.
You don’t even have to offer a discounted price to make the item a promo offer. Things like free shipping, free gifts, “buy X to get Y free” style offers, or freebies like PDF files relevant to your customers are all part of a discount strategy.
It’s all about offering something beyond what the original price would be.
The most popular marketing discounts are:
- Discounts on products
- Free shipping
- Quantity discounts
- Pricing deal above spending thresholds
- New customers discounts
- Abandoned cart offer discounts
- Loyalty discounts
What are the different ways of implementing discounts?
Reduced price – The basic discount strategy
From (in)famous Black Friday-Cyber Monday sales, through seasonal discounts, flash sales, and storage cleaning – cutting the original price is the simplest yet extremely effective discount strategy. According to various studies, it’s a pricing strategy used by 97% of sellers. It can greatly increase sales, but the trick is to ensure that the discount is not killing your actual net profit.
Promotional discounts can come in different forms. You can run a site-wide discount or focus on particular items or categories. You can automatically apply discounts in your shop so that your customers won’t have to do anything or you can offer discount codes and the discounted prices show when the order is placed.
Studies show that 48% of customers buy sooner when they have a promo code, so sending one can be a powerful incentive.
There are a few things to consider using this pricing strategy:
- Profit margins you need to maintain
- The duration of the discount event
- Ways you want to promote it to your customers
If you are planning a flash sale, it’s good to show your promo campaign with emphasis on the sense of urgency to encourage customers to finalize the deal quickly.
To get the most out of your discount pricing strategy, calculate the most effective discount percentage for your product or service and analyze your target market.
To generate more sales, create a campaign announcing your promo via emails, web pushes, SMS, social media, paid ads, and internal shop info. If people will be able to easily share the news with their friends, you can even get some free advertising for the sale.
When running a sale, having all the tools to promote it in one place will save you tons of time. GetResponse is a great platform for that, as you can easily add product boxes and discount codes into your messages straight from your shop (and the integration process is super easy).
Click here for an ecommerce marketing guide.
Discounted shipping – Why and when to use it
As shipping cost can be the factor that can make or break your deal, offering lower delivery costs or even totally free shipping is extremely effective to encourage customers to place the order. Surveys show that 47% of shoppers consider free shipping to be the factor that made them choose the shop where they placed their order.
Etsy, a platform that is home to millions of sellers from all around the world, heavily promotes shops that offer free and expedited shipping, making them by default more visible in search results.
If you have more expensive products, hiding the shipping costs in the product price can do the trick. If you send all orders for free without introducing a higher price for the product itself, it’s most likely that this solution won’t be sustainable.
Think of your own shopping decisions. Most of us will see free shipping as a great deal. Even if we don’t believe it’s just charity on the part of the shop owner, we’re still happy to get it.
Offering free shipping only when the order reaches a given value threshold is a very common practice. Customers prefer to pay for an additional item than for the shipping itself, so it’s an easy way to boost the average order value, capture customers, and entice them to complete the order.
This solution can be the best way to offer free shipping for smaller sellers with cheaper products.
Sending a discount code for free shipping with your email marketing or SMS campaign can be also a great way to reach out to your customer base and offer them a good deal.
Buy one, get one free – Quantity discounts for boosting order value
When your customer is completing the purchase, they may not be willing to spend more than originally planned. But if they see an obvious gain in the form of a free item, they are more likely to add additional items to the cart. This strategy, also known as “buy one, get one free” or BOGOF, can help you to manage stock or encourage clients to place larger or more frequent orders.
As effective as this strategy is, consider what products you want to discount this way. It’s a perfect pricing strategy if you have a stock of items acquired for a lower price than usual or if you can make a bulk deal on a larger order from your supplier.
This type of offer can be a nice way to show your appreciation for loyal customers. You can reward those who are repeat customers with a “buy X, get Y free” discount code and it’s especially easy if you are using marketing automation tools, like GetResponse, so it can be done automatically for you.
Lower prices for larger orders – Offering discounts without much profit loss
This discount strategy is taken straight out from the B2B playbook. The more you order, the less you pay. And because your own suppliers most likely have the same rule, you don’t even lose much profit offering it.
This type of discount is great for increasing sales and benefiting the way your customers look at product prices.
If a certain cart value becomes a threshold for getting a good discount, the perception of the price can be changed from an obstacle to almost a tool to complete a mission of reaching that discount tier. The price of a singular product is no longer the enemy thanks to the discount pricing strategy.
New customer discount – Converting visitors into paying customers
Sending a welcome discount code to new customers is a well-established practice and it doesn’t seem to be getting old. Offering a discount is a great way of customer acquisition, and the larger your contact base, the bigger your audience for future discounts and events.
A whopping 76% of visitors are happy to share their email address if it will get them some deal or discount. All you need to do is to show them a popup or form to subscribe to your list and send them a warm welcome message with a discount code.
Using a subscription form and autoresponder message on a platform integrated with your shop means you don’t have to do a thing for this welcome sequence to take place each time you get a new subscriber. Once you set it up, it’ll all be done for you, so you can focus your efforts on promoting and developing your business.
Abandoned cart messages – Discount codes to the rescue!
The majority of online customers – 69.8% – abandon their shopping cart without completing the purchase. You can save many of them with automated abandoned cart emails containing discount codes.
You’ve already invested so much into this visitor to get them to the point where they left. You’ve convinced them to visit your shop and managed to keep their interest in your product enough to make them add it to the cart. Now it’s just one more push to the finish line and if they need a nudge, then that’s what you’ll give them!
It’s nice to create a catchy message (here you can find some great inspiration) and sweeten it with a small discount. It’s more efficient to invest in the discount given to on-the-fence customers than to acquire totally new ones, so set up automated abandoned cart emails and let them boost sales for you.
Loyalty program – A way to appreciate repeat customers
A loyal customer is a precious, rare animal all store owners want to tame. Nurturing relationships with customers so they grow into lasting connections takes a lot of effort and consistency.
Personalized discounts for such customers are a way to show you really appreciate the fact they stick around and come back for more of your products.
A discount strategy for returning customers should be handled in a few different ways.
First of all, consider creating loyalty discounts. You can create an automation that will assign scores or simply create a filter based on how much in total a customer has spent in your shop or how many orders they’ve placed.
When they reach that threshold, send them an automated message with a freebie, discount, VIP offers, or another goodie.
Another way to engage with long-term customers is sending them birthday discounts or freebies if you provide a way to collect birthday dates in your shop or subscription form.
It’s worth mentioning that 76% of customers appreciate it when brands include products based on their historical purchases.
Also, 80% of customers are more likely to buy from companies that send them targeted offers.
Use that to your advantage and, when sending those loyalty rewards, use their purchase history to make it meaningful and personal.
Discover how GetResponse’s marketing automation can do all the above for you easily.
What to consider when building a discount strategy?
Sometimes a discount pricing strategy is best short-lived, like stock clearing or seasonal sales. Others, like loyalty offers or new customer welcomes, are long-term programs that benefit over time.
Discounts play different roles in nurturing the relationship with your clients. Some, like free shipping, prevent customer frustration.
Others, like lower prices for larger orders, affect the perceived value of the ordered items. Flash sales are designed to spark customer interest.
Be sure you always stay within the profit margin that assures you a steady net gain for your business. If you are a smaller seller, consider rewarding your customers with free ebooks linked somehow to the items they’ve purchased.
Sometimes offering a guide or webinar on a topic that is meaningful and helpful, and can be an effective way to reward loyal customers. It won’t replace offering them discounts in general, but it may replace lowering prices.
But when you aim to save an abandoned cart or clear your old stock, discounted prices or discount codes are the best tools to do it.
Tools that’ll help you bring your discount strategy to life
Setting up a discount pricing strategy is one thing, but getting the word out is another challenge. If you want to save time and be sure all your necessary messages will be sent out at the correct time to the correct customer base, you need a plan plus a good tool to execute that plan.
The advantage of using GetResponse in this scenario is that once you integrate your shop with GetResponse, all the tools you need are there within one platform. You can easily use discount codes generated in your shop.
Setting up autoresponder messages will allow you to welcome new customers with those discount codes. When conducting a flash sale, it’s easy to add discount codes straight from your shop into newsletters and automation messages.
Speaking of automation, this powerful tool allows you to create paths for every customer type, starting from the day they give you their email address, with proper discounts delivered along the way.
You can filter them based on their actions and interests to provide personalized offers and content. Later, you can enroll them automatically into a loyalty sequence, send them birthday gifts, and encourage them to buy again.
Click here to learn how to easily start using marketing automation.
On the same platform, you also have quick transactional emails which allow you to automatically save abandoned carts and send beautiful order confirmations.
As counterintuitive as it may seem to offer your products for less, discounts can propel your business and help you boost sales. Customers are always on the lookout for a good discount and having to choose between a shop offering only full prices and one offering some kind of discount, they will usually choose the latter.
The perfect scenario for you as a seller is to take discounts under consideration when ordering your stock and setting prices in your store. Then, discounting strategies are part of the planned product lifecycle and you stay within a safe profit margin. Be sure to monitor your competitors, keep in touch with your customers, and offer them value with each discount.
Don’t forget to market your sales well, so that the world will hear about your awesome deals, which will generate more sales and higher order values in your shop!