Boost your Business with your Online Shop - and the right Discounts!
Published by Incomedia in Guides and Tips · Thursday 22 Aug 2024
In the competitive e-commerce world, standing out and gaining new market shares can be quite challenging. You need to be creative and employ all the best strategies. Plus, you shouldn’t be afraid of relying on discounts. They can be a perfect tool for promoting sales as well as a powerful growth engine for any kind of online business.
Discounts are not only a way to attract new leads; but also a great opportunity to reward your existing customers, bring them back to your website to discover new products, revitalize your inventory, and test new marketing strategies.
In short, discounts are like a magic wand that, if used wisely, can turn your online shop into an irresistible attraction, capable of boosting your sales and profits.
Let’s explore how to best take advantage of discounts to give your online business new life.
Why do discounts work? The power of psychology in marketing
Let’s start with the facts: everyone, at some point, is sensitive to discounts. We all know the feeling of getting a discount and the excitement of getting a good deal.
Have you ever wondered why discounts work so well? Understanding this can help you use and communicate them more effectively. Luckily, psychology has extensively studied this topic and has provided several insights.
Well, discounts are powerful marketing tools because they are based on biases and principles typical of human psychology. Here are the main ones:
- Loss Aversion: this cognitive bias makes us perceive the pain connected to a loss as more significant than the joy of an equivalent gain. As a result, we tend to consider an offer as a chance we can’t miss, even if the discount is relatively small.
- Anchoring: this cognitive bias makes us rely heavily on the first information we receive when making a decision. The initial price we associate a product with becomes a reference point in our minds. When we see a discount off that price, the product automatically appears more appealing.
- Convenience Sampling: we are always looking for opportunities to save money. A discounted price makes us feel like we’re getting a bargain, which leads us to buy items even if we don’t necessarily need them.
- Social Proof: research shows that we tend to mimic other people’s behavior. If we see many people buying a discounted product, we are more likely to buy it too, thinking that we are making the right choice.
In addition to these biases and general principles, there are specific factors that can influence the effectiveness of discounts. The first one is the size of the discount: the larger the discount, the more it’s perceived as an opportunity that can’t be missed. Also, the duration of the offer must not be underestimated: limited-time discounts generate a sense of urgency, prompting people to make immediate purchases. Finally, the level of personalization of the discount should be taken into account. Personalized offers, especially those that create a sense of exclusivity, are more likely to be perceived as relevant and interesting to customers.
Psychology isn't the only factor at play. When we get a bargain, our brain releases dopamine, a neurotransmitter associated with pleasure and reward. This makes us feel good and encourages us to buy more.
Understanding these mental processes can help you plan discount strategies that attract new customers and keep the existing ones happy, enhancing the overall value of your online shop.
Why are discounts important for online shops?
Now that we know why we react to discounts the way we do, it’s easier to understand why they are such a crucial tool for any online shop.
First, discounts can help attract new customers. A well-promoted, attractive offer can encourage users unfamiliar with your brand to visit your website and discover your products. Often one thing leads to another, and if you work well, a casual customer can turn into a recurring one that regularly buys from your store.
Discounts are not only effective with new customers but also perfect for retaining existing ones. By rewarding your regular customers with exclusive discounts, you give them a reason for buying again from your website, enhancing their trust in your brand.
By increasing the likelihood of purchase by both new and existing customers, an effective discount strategy will lead to higher sales and revenues. Moreover, by managing your offers wisely, you can promote the launch of new products as well as reduce the amount of inventory that may perish or go out of style.
How to efficiently use discounts? 7 tips you should follow
The benefits of discounts are clear, but to maximize their potential, it's important to use them strategically and thoughtfully. Here are then some tips for you:
- Define clear and measurable goals
Before launching a discount campaign, define what you want to achieve. Do you want to increase sales by 10%? Acquire 50 new customers? Get a 2% conversion rate? Having clear goals will help choose the best kind of discount and measure the campaign’s results. - Choose the most appropriate kind of discount
There are different kinds of discounts, such as percentage or fixed discounts, coupon codes, and free shipping. Choose the type that better suits your goals and your target audience. We will further discuss this topic in the upcoming section. - Segment audience and customize offerings
Not all customers are the same. Segment your audience according to parameters like interests, previous purchases, and browsing behavior. Then create personalized offers for each group. This will help maximize your campaigns’ effectiveness. Remember when we said people love exclusivity? - Carefully plan the timingConsider your business cycle, seasons, and market trends to understand the best time to offer a discount. For instance, if sales tend to drop during summer, offering discounts during these months can help keep revenue steady. Alternatively, try to take advantage of recurrences such as Black Friday, Cyber Monday, and major holidays that are now seen as key moments for enjoying discounted deals: these are all opportunities for being competitive.
- Communicate discounts efficiently
An attractive offer isn’t enough, it’s important to communicate it effectively. Use your website, e-mail marketing, social media, and other channels to make your audience aware of your promotions. - Monitor the results and optimize the campaigns
Keep track of the progress of your discount campaigns and evaluate if they are achieving the goals you preset. Based on the collected data, you will be able to optimize your campaigns and improve their performance. - Always balance discounts carefully
Offering discounts can attract customers and boost sales, but you have to make sure that too many discounts do not eat into your profit margins. Always calculate expenses and income carefully, to be sure about what’s the maximum discount you can offer.
Different kinds of discounts and when to use them
We mentioned that choosing the kind of discount is crucial for a successful promotional campaign.
While a discount generally means a reduction in the price of a product or service, there are different kinds of discounts. Here are the main ones:
- Percentage discount
This is the most common type and involves offering a percentage reduction on the price of a product or product category. For example, a 20% discount means that customers pay 20% less than the original price. It’s versatile and can be used for many purposes, such as increasing sales of a specific product or clearing out inventory. - Fixed discount
This discount applies a fixed reduction on the price of a product, regardless of its original price. For instance, a fixed $10 discount means that customers will pay $10 less than the original price, regardless of the original price of the product or service. It’s a good solution for drawing attention to specific items or offering a great deal on high-end products. - Coupon code
This is an alphanumeric code that customers can enter on the checkout page to get a discount. Coupon codes can be used for offering discounts to a specific customer group (such as loyal customers or newsletter subscribers) or to promote specific products. - Free shipping
This discount involves free shipping of a product or service. Customers tend to appreciate this kind of offer, and it can boost sales and increase the average order value. It’s particularly effective for online shops selling low-cost products or having expensive shipping costs. - "Pay X for Y" Promotions
This promotion offers a certain number of free products in exchange for purchasing of a larger quantity: an example is the typical “3 for 2” promotion that offers a free product if customers buy 2 of the same kind. It’s a good way of stimulating purchases and clearing out in-stock products. - Limited-time discounts
This kind of offer provides a discount that is valid for a limited period of time. This creates a sense of urgency and typically induces customers to buy immediately. It’s also a good solution for launching new products or generating sales during peak times of the year.
WebSite X5: a help for managing discounts
Having decided on your strategy, most of the work is done. You know which discounts to apply, the best ones to choose according to the different criteria, how to communicate them effectively and to whom, as well as their amounts and duration.
Now it’s time to activate them on your online store and promote them effectively. You need the tool you developed the online shop with to support these steps and enable you to easily manage the planned promotions.
With WebSite X5, for instance, you can create your online shop and set all the discounts and promotions you want to develop your business. The plus is that, since it’s very simple to use, you can do everything yourself: you won’t have to depend on nor wait for the intervention of third parties to activate and make the planned discounts available right away.
More specifically, with WebSite X5 you can set discounts/coupons on:
- specific products;
- the order total amount;
- shipping costs, making them cheaper or free of charge.
You can set fixed or percentage discounts, define the dates they will be active, and associate them to coupons.
With WebSite X5, you can manage the entire website, not just the e-commerce section. This means that, in addition to activating discounts, you can easily update your website to highlight the products on offer. For example, you can report them on the Home Page, create a “Special Offers” section, or even add banner ads.
When you have an active promotion, it is advisable to share it on all your channels, to promote it as effectively as possible. You could use social media, send e-mails, or activate ad campaigns. In such cases, it’s best to make sure that all channels lead users to a specific Landing Page. With WebSite X5, you can create all the Landing Pages you need and optimize them so to maximize the conversion rate.
In short
Discounts are a powerful asset for your online shop’s success, but it’s important to use them strategically and wisely. With a little creativity and the right tools, such as WebSite X5, you can enhance your business and reach new customers. Are you ready to boost your business with your online shop? Learn how WebSite X5 can help you create and manage effective discount campaigns.