Do you know a customer who has been able to resist the lure of deals and discounts?
Afterall who can resist the temptation to buy more and pay less?
Not many, I bet!
Don’t we have enough proof in the form of the year-on-year record-smashing sales of Black Friday, Cyber Monday, Single’s Day and closer home, The Great Indian Shopping Festival.
The intense psychological pull of saving money by buying products on offer price not only makes us buy a thing or two but in fact, makes us buy even if we do not have an immediate need for the product.
Discounts: The Golden Formula To Get More Conversion
No wonder, deals and coupons have been the greatest crowd pullers for any business. By offering regular deals you can actually condition your customers to wait for them and stay loyal to your brand. Simply put, deals create a demand where there was none and drive your sales.
The pull of a deal and coupons become even more underlined when we check some quick facts about how they are redeemed;
- 8x higher chances of conversion for merchants with an active discount code
- 91% of customers return to shop more often if they get more coupons
- 2X more e-coupons will be redeemed worldwide in 2019 as compared to 2014
- 87% increase in mobile coupon users from 2014 to 2019
- 77% of customers spend more than planned when redeeming mobile coupons
- 94% rise in digital coupon redemption by 2022
- 4 out of 5 coupons would be redeemed on mobile by 2022
The Mathematics And Psychology Of A Promotion: Things You Need To Know
As an online merchant running a deal with promotional offers can be quite a balancing act. Offers bring more traffic and conversions but if not planned and calculated well, they can eat into your profit margins.
The aim of your deals should be to lower the profit margin a bit in the short-term so that you create a demand for your products. However, the ultimate objective is to create an interest in your products and get more orders from your customers in the long run. If you also factor in the customer lifetime value (CLV) while planning your deals you can substantially cut your marketing and customer acquisition cost by using discounts.
Offering deals also help you cross-sell, upsell and get rid of your unsold inventory. All these measures increase your ticket size and thus make up for the lower profit margin. Also, the word of mouth about the deals works as a magical marketing campaign which further boosts your conversions and profit margin.
While you have the mathematics in place, it is equally important to understand the mindset of your customers to run a successful promotion. In-depth analysis of their behaviour, buying patterns, segmentation(age, products, order, time of purchase etc.) of your customers will give you in-depth understanding to plan, segment and time your promotions for highest conversions.
By creating a limited period offer, you create a sense of urgency and scarcity which makes your flash sales a rapid conversion tool. Similarly, social shares about your special deals can make other customers eager to grab the deal which their peers are boasting about.
As visuals affect the human brain more than words, offering visual comparisons your old and new prices can literally make your products fly off their shelves. You can strike off a higher price of the product and display a much lower price to make the conversion of your deals and discounts more effective.
Over and above all, make your customers feel special by giving them personalized deals. This gives them a sense of exclusivity and makes them feel special. No wonder, they take the deals as favour crafted and bestowed for their benefit.
When long as you do your maths right and also understand the needs of your customers, you can create the deals that can set your cash counters ringing.
How To Plan Your Promotions To Maximize Your ROI
The goal of your offers should not only be to get more order volume but also to bring in a higher order amount. Also, while maintaining your profit margin you should not forget to plan out your offers in a way that it does not tarnish your brand reputation.
To help you plan the strategy of your deals and offers, StoreHippo brings some expert advice that will help you get the maximum ROI. Let’s see you-you can use them to boost your conversions:
- Big Ticket- Big Deals
Every business has a variety of customers, small ticket, big ticket, occasional buyers and so on. Evaluate your order history and segment these buyers in their respective groups. Now, offer special discounts to your big-ticket and frequent buyers. This special offer will maximize your ROI and keep these customers loyal to your brand.
StoreHippo offers you easy tools to segment your customers and offer apply different deals and coupons based on the order size, product or category. Using these tools you can easily plan specific deals for your various
- Be Unpredictable
Surprise your customers by offering deals when they are not expecting it. If your offers are too predictable or too frequent your customers will lose interest in them. Also, they will bide their time and create dry spells on for your business.
A much efficient promotion plan will be to offer real-time coupons while your customers are shopping. This will not only push them to complete a purchase but might also help you in cross-selling and upselling. This can also help in reducing cart abandonment and thus help your regular sales.
StoreHippo helps you to send real-time coupons and deals to your customer by using unified notifications and checkout level product and order volume discounts. You can also use coupons to run flash sales that create an order upsurge.
- Create An Elite Group Of Products
Your deals should be planned in a way that it helps to move your dead stock and unsold inventory first. Also, you should have an exclusive or elite category of premium products that make the best merchandise on your site. Identify such products and keep them out of frequent promotions.
This will help in maintaining their exclusivity and your customers’ will perceive it as more valuable. Even if you never put them on sale, your customers will still have a steady demand for it as they think that owning it will make them a member of the elite group who can afford their product.
Also, when you offer a once in a blue moon offer on that product it will ensure that your order volume soars and you will be able to clear any unsold stocks.
StoreHippo has ample features to help you implement this type of exclusive discounts. You can set a one-time coupon with expiry date for all such products on your website.
- The Lure Of BONUS
Deals need not translate into a certain price off. A good strategy is also to give some bonus or FREE item on purchase of certain goods. This is a very common practice adopted by merchants who offer BOGO(buy one get one free), a smaller free product with a big ticket product or one free product in a bundle of products.
This type of promotion works really well with personalization or to move related products from your unsold inventory. For example, if you have a fashion and apparel site, you can create a look with a set of clothes and accessories and offer a small ticket item from this product bundling as a free product.
StoreHippo helps you plan this type of promotions and offers with its product bundling and powerful rule-based discounting. These enable
- Ship For FREE
The power of FREE shipping is one we cannot ignore. Studies suggest that 60% of shoppers buy more to qualify for free shipping. Undoubtedly free shipping is a proven way to boost your sales. Customers also remain less fussy about a bit delayed delivery if they get free shipping on their orders.
You can easily use this tool to drive more traffic and get more conversions. However, you need a smooth, affordable and streamlines supply chain to implement and use this strategy. You can easily plan a promotion wherein you offer free shipping on the big-ticket items.
StoreHippo helps you to incorporate free shipping easily by offering discounted and reliable shipping partners through its shipping aggregator platform ShipKaro. Using ShipKaro you can work out the most economical shipper for any given product or region and use these savings to offer free shipping to your customers.
Discounts and deals definitely help you get more attention, traffic and conversions. However, you have to do the balancing act where your profit margins do not take a hit due to the excessive price drop. If planned strategically and with in-depth analysis, your deals and offers will definitely give a fillip to your business.
So what are you waiting for, begin planning your next promotions with the rich features of tools given to help with your next promotion? Have a suggestion or a query? Feel free to post your comments below and we will connect with you.