Discounts are one of the most tried and true sales tactics we humans have ever come up with. To the customer, the thought of missing out on the chance to save on a product they’ve considered buying is often too good to resist.

But before you decide to run a perpetual 10% off sale, or blast coupons codes out on social media like there’s no tomorrow, take a look below at some of our tips and tricks to make sure you make the most of your promotion.

Why discount?

The first question you should ask yourself is ‘what is the ultimate value you hope to bring’. You should always remember to sell on value, not on price – but discounting can still be a powerful weapon in your ecommerce arsenal. Here are a few reasons why ecommerce businesses choose to offer discounts.  

Incentivise first purchase  

Winning a new customer is always harder than selling to an existing one. In fact, it’s up to 10 times harder!

Offering a small discount on a potential customer’s first purchase is a great way to nudge their foot through the door. And once they’ve experienced your product and service, it’ll be far easier to generate repeat business.

With the right tech tools – platforms such as JustUno, Klaviyo, and more – you can target new visitors and non-purchasers, and create a discount offer just for them.  

Recover abandoned carts

Abandoned Cart automations are one of the best ways to recover sales. If a customer adds a  product to their cart, then leaves your website before checking out, you can use email automation to follow them up, and hopefully get them to return and complete their purchase.

Sometimes however, it takes a little more incentive to get them to buy. If an initial reminder email doesn’t work, it might be worth sending a second email with a small discount code.

Reward loyal customers

If your ecommerce business has a loyal customer base (we hope you do!), then you should definitely consider rewarding them from time to time. Rewarding loyal customers ensures they’ll be so enamored with your brand that they can’t help but tell their friends.

Setting up rewards to go out specific customer milestones (purchase anniversaries, or reaching a certain lifetime spend, for example) can pay you back dividends!

Move hard-to-sell stock

The ‘must go’ discount is very common. But in ecommerce, where brand is everything, these should be used very carefully.

Discounting products heavily can cheapen their perceived value, and in turn, act negatively on your brand. However, if you’re hoping to free up some warehouse space for new stock, running a special on a certain product or range can be an effective tactic if done correctly.  

Sales events

There are numerous opportunities around the year to run clever marketing campaigns – and a small discount or incentive is a great way to maximise your return. Consider a Christmas voucher, Black Friday/ Cyber Monday sale or a ‘Back to School’ bundle discount.  

Discount types

Not all discounts are the same. There are more ways than just offering 10% off of everything that you can implement to get the best out of your product range and customers.

Percentage based  

Percentage based discounts are a standard in ecommerce. These can be product specific, or vouchers that apply to your cart total. Depending on your price, range and other factors, these can be effective from as little as 5% off.

Cash amount discounts  

Cash amount discounts are a little different. By offering a set dollar value off of the price of your order, you can often boost your revenue. Rather than offering 10% off for orders over $100, you could instead offer $10 off orders over $100, and save on that added margin that would have been lost when a customer made a larger order. For example, a $150 purchase would mean a $15 dollar discount at a percentage based rate, whereas fixed cash amount remains the same.

Free shipping

Offering free shipping is a popular way of winning a sale – especially when the offer is given at checkout. One of the most highly reported reasons for abandoning a cart is additional shipping costs. Potential customers will get so close to the end of the sale, then turn around and leave after seeing their total shoot up when shipping has been factored in.

Free shipping offers are high converters. In fact, Stitch Labs found that free shipping can boost revenue by 10%. Plus, as an added bonus, free shipping doesn’t cheapen your product or brand like other discounts have the potential to.

If you’re looking for a discounting strategy sure to pull in more sales, this is the one.

Smart discount tactics

Before you start hacking through your prices – let’s take a look at some of our tried and true discounting tactics. These will help to ensure you maximise your conversion rate, keep your brand in high regard, and don’t lose out on any profits.

Laddering

Discount laddering is all but essential in modern ecommerce.

Rather than handing out codes far and wide, you can target your leads and customers at the right stage of their journey with discount codes – then offer progressively better incentives until you reach their sweet spot.

Let’s say you decide to offer a discount to recover lapsed customers. Rather than immediately send out a discount to all those who haven’t purchased in the last 3 months (for example), you might like to start off with a 10% discount. You’ll find that for a fair chunk of your customers, this is incentive enough. A month later, you might take the remaining customers, and offer them 20%. Then a month after that, a 30% to the toughest nuts to crack.

As you can see, by laddering your discount, you’re keeping as much money as possible on the table. Plus, you’re maintaining the quality of your brand by not offering huge discounts willy-nilly. Lastly, you’re showing customers that you care about their business by upping the ante.

Discount codes

A second great way of keeping as much revenue as possible is to send out discounts selectively in the form of coupon codes.

Ecommerce platforms like Shopify enable you to get incredibly fine-grained with the settings on your discount codes. You can target them to only work with specific products, ensure they can only be used once per customer, and more. A customer receives the code, then enters it at checkout. It’s that simple

Discount codes, in lieu of direct, blanket discounts, are a great way to reward certain customers, or target discounts to select groups.

Dynamic population

If you’re concerned about people sharing your discount codes with friends, or having them end up on an internet forum like Coupons.com or Retail Me Not, then you can always use dynamic discounts.

Through the magic of technology, you can generate once-off, single use discount codes for certain customers. This ensures they can’t be shared around and used again and again.

Dynamic coupons are a great way to give away large discounts to loyal or hard-to-crack customers, without the fear of the ending up going viral and biting you in the rear.

Link sharing

Rather than offering discount codes, Shopify and other ecommerce platforms also give you the option to create discount links. I.e: a customer clicks a link you send them to your store, and the discount is automatically applied to that website session.

This is a great tactic to use as it forces the customer to make their decision quickly, while also improving the user experience of your online store.

Make your discounts time limited

Make some of your discount codes time limited! Don’t simply allow them all to run forever.

This is especially important during holidays and other sales events. Create a sense of urgency by explaining that your discount will only last for a few days – i.e: Christmas sales that end on Christmas Eve, or a one-day only Valentine’s special.

Wrap up

If you need any help with your ecommerce discount strategy, or are looking for other ways to improve your customer lifecycle, get in touch with us today!  One of our strategists would love to take a look at your business and see how we can help.

Simon Byrne

About Simon Byrne

As Andzen's Head of Customer Strategy, it's my job to continue the growth of our great company throughout Australia and beyond. My passion is helping businesses solve problems and reach new audiences through creative digital solutions and clever marketing automation.