How to Develop and Measure a Successful Discount Strategy
You know that feeling you get when you see that your favorite brand just put out a slew of new discount codes, or an online shop is having a huge promotion? “Let’s go shopping!”
Most shoppers find coupons and discounts a welcome bonus – and they can lead to more sales and increased customer loyalty and customer acquisition, when implemented strategically. That means being careful about the discounts and deals you run, so they don’t actually eat into your profits.
There are many ways to use promotional discounts, coupons and deals to drive sales – and not all of them include a monetary incentive. Keep reading to learn more about how you can use promotional offerings to keep your customers engaged – and track their performance to make sure they’re adding, not subtracting, from your bottom line.
Use the calendar to your advantage
Taking a look at the calendar, there are countless opportunities to bring new customers to your store, depending on the time of year. Use holidays and seasonal changes to invite people to your site: winter vacation, Valentine’s Day and Memorial Day are just a few great reasons for people to make purchases for themselves and loved ones. Tracking the school year is also a good strategy, depending on your products. Offering coupons for back-to-school, spring break or summers off could bring you some additional traffic and new customers. Another effective strategy? Offering weekly or monthly deals to encourage people to check back in with you regularly.
Think about what kind of discounts you should offer
If you’ve never offered discounts or coupons before, it can be difficult to know where to start – there are so many different ways to configure deals. We’ll explore a few different types of discount and how they can help you.
The most common discount that many stores and businesses offer is a percentage discount. This is a predetermined percentage of the price of an item – or total order amount – that you’re able to part with. It’s important here to keep your profit margin in mind, as that will help you calculate what percentage discount to offer. If your margins are on the low side, a 5-15% discount might work. If your margins are quite high, you may be able to offer your customers something more substantial. Offering low clearance pricing can also help you move products that may be lingering in your inventory.
In a similar vein, dollar amount discounts are static, set amounts that you can offer a customer – either as a discount from their current purchase price or as a discount or credit towards a future purchase. Since the amount of this discount is set, you don’t have to worry about doing a lot of math to figure out what discounts to apply where. Some examples are $10 off the total purchase price, $5 off of every $30+ purchase, or $15 off the next purchase.
Some other simple deals to offer include free shipping or a free gift with purchase, both of which can be combined with other discounts and promotions to create an exciting, valuable shopping experience for your customers.
Offering promotions without discounts
If your business isn’t yet at the point of profitability where you’re able to offer discounts to your customers, you can still get in on promotions by offering other types of special offers that won’t affect your bottom line.
If your site has a blog, guide or community forum, you might consider gating your content so that there is some content that’s exclusive to customers who spend a certain amount at your store, make a certain number of purchases or have otherwise shown brand loyalty. You can advertise this as a VIP program or member-exclusive content.
For additional fun and customer engagement, contests are a great way to get people to your site and involved in events. Inviting your visitors to enter to win, or offering them contest entry for every purchase, is easy on overhead and creates buzz around your brand.
Using and tracking coupons
Once you’ve decided on your promotional strategy, it’s time to think about how to keep track of who’s taking advantage of your coupons or discounts and when – and how they’re affecting your bottom line.
Analytics are a key part of evolving your promotions game plan. Maybe your Valentine’s Day coupons weren’t as popular this year, but your back-to-school discount deals worked like magic. Or maybe your 20% off discount actually doesn’t drive as much revenue as your 15% off discount.
Knowing your coupon and discount performance on a granular level will help you determine where to set your sights for future promotions to create a more targeted approach – and make sure your promotions strategy is a profitable one.
Coupon analytics in Glew
Glew makes it easy to report on your coupons and discounts, within the context of your ecommerce store performance. You’ll find these metrics and visualizations under Orders > Discounts, with data pulled from your ecommerce platform.
It’s important to have both a high-level and drilled-down view of your discounts, including your overall promotions performance and the performance of individual discounts or coupons. Look at metrics like:
- Total discounts used
- Attachment rate (how many of your total orders applied a discount)
- Revenue earned from orders where a discount was applied
- Total amount discounted
- Average order value for orders where a discount was applied
- Average discount value on an individual order
Glew also displays these metrics in easy-to-read visualizations that show how you’re trending over time, both overall and for individual discounts.
You can also see individual orders that have a specific discount or coupon code applied, allowing you to drill down even further and see the which customers have used a coupon or discount.
The point of all this data? To help you identify whether your promotions are doing what you want them to – attract more customers and drive additional revenue – and make sure they’re not doing what you don’t want them to – drive down your average order value and margins and hurt your profitability.
The right discounts strategy – paired with effective reporting and analytics – can help you grow your business, whether you’re just starting out or an established ecommerce brand. What promotion strategies have you found to work best?
Want to learn more about the ecommerce metrics you should be tracking to grow your bottom line? Check out our 2019 ecommerce reporting checklist to learn the 27 metrics you should be reporting on daily, weekly, monthly and quarterly:
An Overly Analytical Approach to Optimizing Your Ecommerce Store
September 23, 2020
How to Conduct Effective Customer Analysis
August 31, 2020
What is Marketing Analytics? A Comprehensive Guide
July 30, 2020