How to Use Discounts Properly

This is a blog post by Neil Jones

In the aftermath of Black Friday I thought it would be a good time to talk about coupon codes and discounts in general. These can prove to be a great tool in driving sales and any savvy shopper knows that a quick search online will pull back a whole host of coupons and discounts. But overdoing it on discounts is only helping to fuel the prices wars so many online retailers now find themselves in.

What can go wrong with discount codes?

Continually offering your customers discounts on new or existing product lines will only train your customer base to wait until they get another email with the latest discounts before they are willing to part with their cash.

Many companies now find themselves so far down this road that it can be very difficult to wean themselves off discounts and coupons. If you think it’s not too late one of the first steps you can take is to segment your customer base into:

People that buy at full price,

People that buy at full price but also use coupon codes when available,

People who only ever use coupon codes.

Once this is done the first and most logical question to ask is why are we offering discounts to people who buy at full price anyway? And this should be the first course of action, STOP sending your best customers discounts!

Your next plan of action should be to tackle the other 2 segments starting with the people that buy at full price but also use discounts when available. This is probably the hardest segment of your customer base to turn around and in likely hood take the most work. The first thing to do segment them by their buying history, what they like and what they have bought in the past, target individual groups with your marketing campaign highlighting products that they are interested in, wait and review the results. This will help to give you an idea of the percentage of this group that are still willing to pay full price for something they like. Now try and drip feed this group discount codes to see if there is a greater up take and more profit at the end of the campaign. The ultimate goal here is to turn this segment of your customer base into a group of people that are willing to pay full price for what they like and your job will be to make them aware of these new product lines when they are added.

The last segment you’ll need to try and tackle are the people who only ever buy when there is a discount available, in many ways these customers are past the point of no return, after reviewing you may decide that this segment of your customer base is just not profitable enough to spend vast amounts of time marketing to them. Or you could keep drip feeding them discount codes just to keep the sales ticking over while you’re in this transitional process. You can gradually begin to decrease the amount your items are discounted by, or instead of a discount offer them something else in return.

The internet has made it so easy for any of your potential customers so shop around to find the best prices available and as a result many retailers are fighting price wars on many different sides, adding further discounts and coupons into the mix is just helping to fuel the fires. Many retailers have tried to differentiate themselves by offering free shipping, but now this becoming expected amongst customers to move things further we are now seeing free overnight and next day delivery but in time this is also likely to become the norm and the bottom line is still effective. Offering your customers a loyalty program has proven itself to work but the one thing that will help your store stand above the crowd is to Offer great customer service, be willing to bend over backwards to give your customers what they want, this more than anything will ensure you have happy customer that continually return to a store and a brand they can trust and the growing recommendations from these customers will also help to bring more customers to your store.

About the Author

Neil is head of marketing for eMobileScan, one of the Uk’s leading handheld computers specialists, including the Symbol MC70 range of handhelds, which offer the mobile workforce unparalleled usability both in the field as well as the warehouse