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Ecommerce discount strategy guide

GoCardless
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Last editedOct 20222 min read

A good discount ecommerce strategy can boost sales and bring in lots of new customers, but it requires a fine balance to get it right. A poorly executed discount marketing strategy could cut into profits and even damage perception of your brand.

There are a variety of ways to implement an ecommerce discount strategy that will not affect your brand reputation negatively, and can even help foster loyalty among your customers. To achieve this and also bring in more customers to further boost sales, have a clearly defined plan of actions and understand the goal of each action.

Here is a guide to executing a well- balanced ecommerce discount strategy to increase conversions while enhancing your brand.

What is a retail discount strategy?

The first step is always gaining a full understanding of what exactly constitutes a discount pricing strategy. Retail discount means lowering the price of certain products for a limited period of time. There are also different ways in which the discount can be applied, including:

  • first-time customer discount

  • customer loyalty programme

  • pre-order discount

  • time-sensitive discount

  • discount bundle

  • buy one, get one free

  • markdowns to shift old stock

There are also more complex ecommerce discount strategies which you can implement, including thresholds, referrals and personalisation. Let’s look closer at those.

Threshold discount

Executing a threshold discount pricing strategy is an excellent way of protecting your margins as it guarantees a certain spend before the discount is applied. It works by setting a threshold which a customer must meet before receiving the discount. The thresholds can vary: one good example is Amazon’s free shipping when a customer spends £25 or more on certain eligible products.

Another example is offering a discount when a certain number of items has been purchased, much like the buy one, get one free discount but at a larger scale.

Customer referral programme

Reward customers for recommending your business to friends and family by setting up a customer referral programme. A simple version of this ecommerce discount strategy is to offer a percentage discount on a customer’s next purchase if they introduce a new customer. 

This encourages loyalty and word of mouth advertising, as well as boosting ecommerce sales from the new customers who are more likely to spend with a business that has been recommended by a friend.

Personalised special offer

A personalised special offer can be targeted at previous customers according to items they have purchased before, as well as their personal details such as their birthday. A frequent customer can be emailed an occasional discount on items they buy regularly, as a thank-you gift. 

If your business has other customer information such as their birthday, a personalised special offer can be sent on their special day via email.

Benefits of an ecommerce discount strategy

The benefits of implementing a retail discount strategy are pretty straightforward, since it’s about increasing sales or getting rid of old stock to free up space for new products.

A good discount marketing strategy increases sales in two ways. First by attracting new customers, and second by re-engaging old customers. A discount also speeds up sales, so is good for improving cash flow as well as increasing revenue and profits.

A discount can also be used to free up space for new products by shifting old stock that is no longer selling well or is out of season.

Discount strategy caution

Always ensure your ecommerce discount strategy is sustainable before implementing it. Monitor profit margins regularly to see how any discount is affecting them and adjust your strategy accordingly.

Another issue to consider is the potential for regular discounts to condition customers to wait for a sale, so regulate your retail discount strategy and have clearly defined goals.

Also beware of diluting your brand or lowering its value in the eyes of customers. A discount must feel special.

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