How to use discounts, offers and coupons to drive your sales and conversions
Let’s face it. Everyone loves discounts, offers and free stuff. That’s why getting hold of these as conversion tools can have a significant impact on your customer loyalty. But, offers, coupons and discounts may be powerful double-edged swords if used the wrong way.
As ecommerce grows steadier and smarter every year, soon enough online retailers will find themselves dealing with tricky decisions about the use of discounts and other kind of offers. Shall I offer a discount? When shall I do this? How much am I supposed to drop my prices?
If you have asked yourself this question at any point, please stay with us since we will review in this post some of the pros and cons of having sales and offers on your online store. We’ll also discuss the most popular ways in which these can be used and will help you learn the most effective way to use them in order to drive your customer loyalty and conversions.
- Pros and cons of having offers on your e-store
- Which is the right audience for coupons, offers and discounts?
- Types of offers and discounts you may use
- How to make the most of discounts, coupons and offers
Pros and cons of having offers on your store
Before getting ahead of ourselves to the good part (how to use these to boost your sales), let’s see some of the advantages and disadvantages we face by having offers on our online store:
Pros of having online store offers
- You increase your customer loyalty
- You increase your customer acquisition
- It’s easy to track with Shopify’s Discounts Report
- They are easily and quick implemented in Shopify or you may use apps
- You increase your conversions
- Your stock will move quickly
- You will meet your sales goals
Cons of having online store offers
- Your margins and profitability will decrease
- You may cause damage to your brand
- If your visitors get used to waiting for offers, you will experience decreased conversions outside of sale periods
- You will tend to drive non-loyal shoppers (driven only by the price)
- You will experience a tendency to reduce average order size
- You will attract customers outside your target markets
Which is the right audience for coupons, offers and discounts?
Certainly, online store offers are excellent and effective tools to build up a loyal customer base. However, before you even begin to think about offering juicy discounts on your online store, let’s consider your overall brand strategy.
First, if you have slimmer margins or you are looking out to position your store as a higher-end brand, then you should know better than weekly sales and stick to customer loyalty offers. But, if you have good margins, juicy discounts and daily or weekly sales might be the best way to hit your goals.
Building, growing and making an online business thrive is a stony, arduous process that may require a lot of experimentation to find the right ways. You need to consider if having offers works out for your brand, and, if that’s the case, which types of offers work the best. Ultimately, the approach I find the most convincing is setting a goal for each campaign, starting small and measuring the results.
Types of offers and discounts you may use
There are several types of discounts and offers out there for you to choose from. These are the most commonly used:
- Percentage-based discount
- Dollar value discount
- Free shipping
- Free gift
Know that Spotify supports all of these offers and they use two different types of discount methods:
- Automatic discounts
- Discount codes
Percentage-based discount
This is that kind of discount in which you drop your prices a certain percentage. You may have a shy 5% or 10% off and that’s fine. But you can also have larger discounts to boost your sales, like a 20% or a 25% discount, and people will love you. Finally, if your stock isn’t moving and you have some old stocks you need to get rid of, you can have 50% mad-driving discounts, and people will love you even more. You can apply these discounts to several collections and products in Spotify, or you can offer your discount based on a specific purchase that will allow you to choose which merchandise you need to move faster and actually do it. For example, “Buy two sneakers, get 50% off any sweater.”
Dollar value discount
The dollar value discount can be perceived as a credit. These are the “Spend $200, get 20%” kind of discounts. This is great, because this makes people feel like they are wasting money if they don’t use that 20% off!
Here’s a smart trick you’ll want to keep in mind when choosing between a percentage or a fixed amount discount for a specific product. This is known as “the rule f 100”. If your product is less than $100, use a percentage discount. But, if your item’s price is higher than $100, the wiser is to use a fixed amount discount. The trick here is to make your customers think you’re offering them the biggest discount possible all the time. Having a 10% off of $70 sneakers sounds much better than offering a $7 discount, right? On the other hand, above $100, having a $180 discount on a $1800 item sounds much better than a 10% discount.
Free shipping
Offering free shipping is another great way to positively convert your traffic and boost your sales. Very often, shipping costs is what makes people abandon their carts.
Now, the smartest way to do it is offering free shipping once the customer has reached a minimum purchase value. This will increase your average order value and it’s an option you can easily set up in Spotify as shipping settings. You can also combine your free shipping offer with other promotions, like a 20% discount code for those who subscribe to the newsletter.
Free gift
A free gift with a purchase is an all-time winning sales strategy. It’s an excellent opportunity to increase your average order size and get rid of product that isn’t moving while you provide additional value to your customers and keep them happy. Everybody likes free stuff! You may use a volume requirement in Spotify with a Buy That and Get This discount to offer free gifts for orders over $200, r offer free gift once the customer purchases 5 items.
Automatic discounts
Automatic discounts have a couple pros regarding discount codes. It applies to every eligible cart and your customers will be able to see the discount right there on the cart page before they even start the checkout process. It’s a perfect way to have a storewide promotion on specific products or categories without making your customers enter a discount code.
Now, automatic discounts have proven to make things faster than discount codes. Last September, U.S. customer who bought on Spotify with a discount already applied, reported to be 1.8 times more likely to place another order than those who used discount codes. Automatic discounts speed up checkouts like in 25 seconds, and that makes a difference in today’s dizzy world.
Other major advantage is that, with automatic discounts, customers do not need to leave the checkout page and go looking for the discount code or ask the code via email. Avoiding this tiny issues brings a smoother and more pleasant experience for your customers and will eventually translate into a higher conversion rate for your store.
Discount codes
Now, discount codes also have advantages. In the first place, it’s a great way to offer discounts to the right people. Maybe you feel like offering discounts to your email subscribers, or maybe only to the new subscribers, first-time buyers or repeat customers. You can choose a specific segment and send them a code they will enter on the checkout page to purchase the product.
The second great advantage of using discount codes is that you can easily track the success and outcome of your marketing strategies. If you’re running several campaigns and you have a separate discount code for each one of them, then it’s easy to see what the relative impact on sales of each campaign is.
How to make the most of discounts, coupons and offers
The ways in which you can use offers, discounts, coupons, sales and deals to boost your sales and drive customer loyalty and conversions, are countless.
- Weekly/monthly discounts
- Prelaunch offers
- Holiday and seasonal deals
- Abandoned cart offers
- Email/newsletter subscription offer
- Incentives for liking, following and sharing on social media
- Referral promos
- First-time shopper offer
- Minimum purchase discount
- Exclusive social offers
- Customer loyalty offers
- Exit intent offers
- Retargeted promotions
- Influencer offers
- Customer loyalty program membership incentives
- Offers for purchasing online
- Coupons for purchasing in person
- Event attendance offers
- Customer milestones discounts
Let’s see what makes each one of those worthy and also see an example to help you understand the potential pros and cons.
1. Weekly/monthly discounts
These discounts are those traditional sales every retailer uses to drive conversions. It usually takes place at the end of the month or quarter, and its second most important goal is to increase revenues in order to meet the business goals.
For example, you may find sales and coupons code every week on the online photo department at Walgreens, as well as ongoing promo codes at the bottom of their page.
2. Prelaunch offers
Prelaunch sales are excellent to drive traffic and spark interest if you are launching a new product. It’s also an interesting strategy if you still are at the prelaunch stage of your business. Prelaunch offers tends to cultivate the loyalty of a good customer percentage.
The Jewelry Wardrobe is a fine example of how to use these successfully. They offer a $25 gift card to those who put in their email addresses and some time to fill out a brief survey. The most interesting thing is probably that they started this initiative by reaching out to potential respondents in LinkedIn one by one.
3. Holiday and seasonal deals
There’s no doubt Black Friday Cyber Monday and the holiday season are responsible for boosting the sales up to 70%. But it’s not the only time. There are other national and commemorative holidays like the 4th of July or the Mother’s Day you can take advantage of to offer your customers significant discounts and offers, and while you’re at it, drive up your conversion rate.
For example, Blu Skin Care regularly launches good offers to visitors and past customers on holidays. They promote their discounts through their email, social media, market and website.
4. Abandoned cart offers
Almost 70% of shoppers abandoned their carts when they get to the checkout page or even before. How can you bring people back to complete their purchase? A strong idea is a abandoned cart email offers. The abandoned checkout recovery functionality built-in is no longer available in Spotify if you are using the Spotify plan or higher. For the rest or if you want more customization and analytics, I invite you to check out Klaviyo.
There is an online grocery store called Brandless that sends their abandoned cart email along with a $1 shipping offer after the client has abandoned their cart. This encourages first time visitors to come back and go the whole way through the checkout page.
5. Email/newsletter subscription offer
If you are an online retailer, then you must know that building an email list is a priority for the sake of your business. Providing an offer for those who subscribe to your newsletter and join your email list is a very clever way to increase your conversion rate. In exchange, you get their email addresses, which will grant you the opportunity of building and strengthen a relationship with your customers, cultivate their loyalty and come up with marketing strategies for them in the future.
For example, if you subscribe to the online retailer Overstock.com newsletter, they will offer you a 15% off coupon.
6. Incentives for liking, following and sharing on social media
Once you have set up your store and everything seems to be ready, then you realize you still need to spread the word, and if you do not spend some in a a proper marketing campaign, that’s one of the hardest things to do without bugging people or looking like spam. Now, if you give your visitors something in exchange of sharing your store on their social circles, that’s a great and inexpensive way to grow your customer base.
For example, Truxx offers a 5% discount to those visitors who share their experience with the brand on their Facebook page.
7. Referral promos
Now, the best promo you could ever get for your store comes from satisfied customers who tell their friends and family about it. It’s a proven fact that people are more likely to buy something after being referred by a family member or someone close. Take advantage of this and implement good referral systems. You may choose to offer a deal to the person who refers, to the person who was referred or maybe to both.
Blue Apron and Hello Fresh are two meal-delivery brands that are known for having excellent referral marketing. Every now and then they give promo codes to their customers. Customers can share these promo codes with their friends and family who, for their part, can then have their first food box for free or at a great discount. Now, for every person they refer, the store will also offer the referral a free or discounted box.
8. First-time shopper offer
Converting first visitors into paying customers is vital if you want to expand and grow your business. That’s why providing first-time shopper offer is a key strategy to nudge up your conversion rates.
For example, new visitors at Clearly can have their first prescription glasses at 50% less, their contact lenses at 15% less and, on top of that, the store offers them free shipping.
Other fine example is DODOcase, an online manufacturer of iPad cases that offers a 10% discount if it’s your first purchase.
9. Minimum purchase discount
If you need to increase your average order size, a great idea is to encourage your customers to spend more on your store. Having an offer available depending on the total value of the shopping cart is a smart incentive to do so. Here’s a clever strategy to incorporate this to your store. Calculate the average order size from the past couple months and then offer a discount or free shipping to those who purchase above that number in a 10% or 20%.
Also, if you have a specific product or collection you want your customers to focus on and move faster, you can have a minimum purchase discounts for those.
Nasty Gal, a rather popular online retailer, is well-known for offering free shipping once your shopping cart goes above $100.
10. Exclusive social offers
Social media is there, its power and influence grows bigger every day. Launch exclusive offers on your social networks and you will be cultivating loyalty with your customers. This is also a great opportunity to make people know that following your store and subscribing to your social media is a good idea. You will be growing your customer base and encouraging people to join your community, which will impact positively on your marketing strategies.
For example, Maple Holistics, an online skincare retailer, has posted exclusive offers on their social media in more than one occasion. In the example below they gave their Twitter followers a 15% discount code for all purchases in Amazon.
11. Customer loyalty offers
Marketing professionals know well that rewarding customer loyalty is as important as cultivating customer loyalty. Reward those customers who are already spending time and money with you, and that will create an even stronger retailer-customer relationship. In Spotify is very easy to create discounts for specific customer groups.
For this purpose, you can use an automated email marketing app like Klaviyo to let them know via email about the offer once they have made a certain number of purchases. You can implement a customer loyalty program like LoyaltyLion. Or you can just go back to the old good ways and send personal emails to your best customers offering certain discount or credit for their next purchase.
Having a co-op membership program is an excellent customer loyalty tool, responsible in this case for the massive success of the outdoor shop REI. Members get a 10% back on full-price purchases in the form of a dividend. They also have access to exclusive sales and get often rewards, such as this free $20 gift card that qualifies for a 100+ purchase.
12. Exit-intent offer
Sometimes your visitors just need another little nudge and a second better offer to stay and become a customer at your store. That’s the purpose of exit-intent popups that will show up when your visitor is about to leave the page or close the browser tab. This popup will display a more appealing offer that will make then reconsider and go the whole way through the checkout page.
For example, Auto Accessories Garage has implemented an offer for their exit intent pop-up. They encourage visitors to stay and buy with a percentage-based discount if they enter their email address in the form. If visitors still abandone the shopping cart after that, they will send out an email offering an even bigger discount to persuade them to come back and complete their purchase.
13. Retargeted promotions
Retargeted promotions are good because you only show them to people that have visited your store before, so they already know who you are and what you offer. These ads are merely reminders to come back and the offer will work as a nudge to purchase.
DODOcase comes as a fine example again, since they use offers several times throughout the buying cycle in order to convert visitors into customers. They use Facebook and Google Ads to target their visitors and offer them a 20% discount if they come back and purchase.
14. Influencer offers
Building partnerships with bloggers and celebrities who influence on large audiences is another great strategy to expose your brand. If you, on top of that, offer the influencer’s network a special offer in the form of coupons or referrals, then you have bigger chances to convert their followers into your customers.
One of the best examples is the subscription service for dogs and their owners BarkBox. They often collaborate with influencers to increase their brand exposure and drive sales. To encourage the influencer’s audience to convert, BarkBox gives them an unique offer code for them to share it with their followers.
BarkBox gets yet another benefit from this unique code. Through this unique offer code, they can monitor redemption and find out which influencers were most effective for future campaigns
15. Customer loyalty program membership incentives
We already mentioned the importance of rewarding the loyalty of your customers. Now, as you do so, it’s a great opportunity to also share a bonus incentive. This will give them much more motivation to sign up for the program.
If you haven’t implemented a customer loyalty program yet, we advice you reconsider that decision. Forrester Research reported that customers who belong to one of those loyalty programs tend to spend around $42.33 more average in the course of three months.
Take Big Lots as an example. They offer a $5 discount on your next purchase as soon as you sign up for their Big Rewards loyalty program. Big Lots’ customers can have their rewards online or at the physical store.
16. Offers for purchasing online
Now, this is quite simple. If you want to drive your online sales, you have to create incentives for online shoppers. Whether you want your ecommerce site to back up and support your physical store or you want to expand out of Amazon and create a separate customer base, the right way to increase your conversions is by offering something extra to the customers in exchange of their time and money.
Let’s see the example of Dick’s Sporting Goods. They have a special offer for their customers on their homepage that allow them to buy the articles online and pick them up at the store. They are not getting ready of shipping issues, but they are creating the chance to build a stronger and more personal retailer-customer relationship when they show up at the store to pick up their purchases. They also take the chance to promote other products while the customer is at the store.
17. Coupons for purchasing in-person
But, wait there. Offers can’t only drive online sales, but in-store sales as well. And when we say in-store we don’t necessarily mean a physical store. It’s good if you have a store, but this is also a way of driving sales you can perform personally at events, fairs, expos, trade shows, etc.
For example, Bed Bath & Beyond is well-known for sending out discount coupons customers can use at their physical store. Frequently they even accept these coupons past the expiration date. Their clients must be very satisfied.
18. Event attendance offers
A lot of people go to events in which they were promised to find something, contacts, food, etc. Think about how convenient it would be to use events to build your relationship with engaged customers and build their loyalty. It doesn’t matter if you host in-person or online events, if you do, consider rewarding your attendees with discounts or free gifts, during or after the event. You will probably notice a constant growing attendance for your future events.
prAna Boulder is a truly inspiring example of the aforementioned. prAna retailer location hosts free yoga classes in their store almost everyday. Once the class is over, yoga students can go upstairs and shop at a 25% discount on their in-store purchases. If prAna wanted to drive their online sales, then they could also provide the students with a discount code for their next online purchase.
19. Customer milestone discounts
Once you implement a customer loyalty program, make sure to pay attention to customer milestones. These milestones may represent any remarkable date in the customer‘s personal life, such as birthdays or anniversaries. The most used milestones are those that celebrate the relationship you have built with your customer. That means celebrating the first time the customer made a purchased, the day they joined the loyalty program, the day they spent a certain amount for the first time, the day they reached a certain amount of purchases or celebrating they have several engages with your brand.
Let’s bring Big Lots again as a fine example of great marketing. Their customers join happily and excitedly the loyalty program because they know in advance that Big Lots will have special discounts and free gifts for them when their birthday comes around.
How to make the most of discounts, coupons and offers
You need to have this very clear: offers and discount won’t work the same wonders for every online business since each one has its own characteristics and specifications. You need to start off having a clear goal in mind, understanding the necessities and individuality of your brand and willing to experiment different marketing tools and resources here and there. This kind of clarity and awareness will make it possible for you to use offers effectively to build your customer loyalty and drive your sales and conversions.
If you have already tried on your ecommerce site some of the aforementioned types of discounts and offers, please feel free to share in the comments which one of them have worked the best for your customer loyalty and sales rate.
