Coca-Cola's 1888-issued "free glass of" is the earliest documented coupon.[6][7] Coupons were mailed to potential customers and placed in magazines. It is estimated that between 1894 and 1913 one in nine Americans had received a free Coca-Cola, for a total of 8,500,000 free drinks. By 1895 Coke was served in every state in the United States.[8] (Wikipedia)
The rest is history.
More than 64% of online consumers wait to buy things until they go on sale, and more than 59% search for promo codes before buying anything online.(www.invespcro.com)
Put simply, online customers love discounts, and they’re more likely to purchase because of them (duh). But let’s take the time to truly understand discounting models and approach them in a way that doesn’t compress margins.
TIP - First and foremost, if you can, always price your online products for discount. Given how popular discounts are online and how they become a requirement for success, try and increase the price point of your products 10-30% for sale online.
Here are five proven discount strategies to grow your Shopify.
Progressive Discounts
Growing revenue can be achieved through growing many different metrics, but Average Order Value (AOV) is an important one. Progressive discounts give you the opportunity to increase your AOV by requiring the customer to purchase a larger volume to save. More you buy, more you save.
Ex.
10% OFF Orders $20+
15% OFF Orders $50+
20% OFF Orders $100+
Consumers look for the greatest discount, and progressive discounts encourage them to spend more, increasing their average order value. Assuming your product is consumable, this discount strategy will hopefully increase the rate your product is consumed over the same period of time, increasing consumers’ overall consumption ( i.e. ordering more often).
Discounts/BOGO/Free Shipping
This strategy is going to require a bit of calculating on your part, but it's important to remember from a profitability standpoint, certain discounts can equate to the same margins. A/B testing these different strategies (link to A/B testing article here) will prove invaluable by knowing what your audience prefers.
Here is an oversimplified example:
Say you’re selling a product for $100 + $10 Shipping.
You make the product for $30; cost to ship is $20 ($50 total)
$110 cost to consumer
$60 Profit
You can run the following promotions with the same margin:
10% OFF = $50 Profit/Unit
Free Shipping = $50 Profit/Unit
But this gets interesting when you add more units to the order:
Buy One Get One 30% OFF = $50 Profit/Unit or Total Profit $100
15% OFF 3+ Units = $51.67 Profit/Unit or Total Profit $155
Free Shipping on 3+ Units = $63.33 Profit/Unit or Total Profit $190
There are countless ways to adjust these discounts to work in your favor but it’s important to create a narrative around the discounts too. Creating a story behind the discount has shown to increase the conversion rates of promotions. For example:
“We ordered too much!” Place an order for 4 units and get the 5th one free!
Create Urgency
Another great way to get customers to order NOW, is to offer discounts that expire based on time. Run a promotion with 20%, 15%, 10% discount that expire in 60, 90, 120 min respectively. Shopify makes it easy to schedule these promotions. Just have them start and expire at a certain day and time. Send your email and/or SMS out and grow!
Tip - Always keep the lowest promotion open for 24 hours. Then send a last chance email. Everyone wins.
Leverage coupon code sites.
Typically, when a brand finds out that their coupon code has been picked up by a discounting site, they immediately work to take it down and swap out the code. But what if we were to use these sites to our advantage?
Seems counterintuitive, but recall the statistic up above - 59% search for promo codes before buying anything online. (www.invespcro.com) If customers are going to be searching on these sites, we may as well control them.
Say you are trying to pull in new customers, a decent amount of traffic may end up on your site without a coupon code. Nearly 6 out of the 10 people who do, will end up looking for a promotional code. If you submit your introductory discount code directly to the coupon code sites, it gives you control over what codes are being used and how they can be used. It’s important to not only make these coupon codes a single use coupon code, but to also make them only available to those who have never purchased from your site before.
KISS - Keep It Simple Stupid
Try to disclose the exact amount the user saves rather than having the consumer compute the difference when it makes sense. Known as the ‘ease of computation effect,” consumers need not struggle to know what is most valuable as they would with difficult computations.
For example, when presented with two pairs of numbers, participants incorrectly judged the magnitude of the difference to be smaller for pairs with difficult computations (e.g., 4.97 – 3.96, an arithmetic difference of 1.01) than for pairs with easy computations (e.g., 5.00 – 4.00, an arithmetic difference of 1.00). (https://www.semanticscholar.org)
Keep the offer simple so your potential customers know exactly what they’re getting.
These are just some ways to approach discounting but there are plenty more that can help you increase revenue and grow your Shopify.
Now go and grow.
J
Recommended Apps:
With Unlimited Bundles & Discounts you can easily create discounts for bundles (obviously) and buy more get more discounts.
As mentioned above, urgency is a great motivator. Bold Discounts gives you the ability to add countdowns for your discounts directly on your product page along with many other features.
Leave a comment
This site is protected by hCaptcha and the hCaptcha Privacy Policy and Terms of Service apply.