Boost Your Promotional Strategy (+ Online Sales) With Customer Discounts and Free Shipping

Every consumer loves a good deal (myself included).

So much so that 92% of consumers in the U.S. used coupons when making purchases last year.

With so many consumers accustomed to benefiting from coupons, discounts and other promotions, it’s important to implement a strong promotional strategy.

Offering discounts, introducing a loyalty program, or creating promotional marketing strategies can benefit your business in both good times and bad.

Your strategy should focus on gaining and retaining loyal customers. How can you offer something of value to your customers? How do you create a feeling of loyalty, making your customers feel important?

“It’s much easier to double your business by doubling your conversion rate than doubling your traffic.” – Bryan Eisenberg, Co-founder Buyer Legends and NY Times bestselling author

In today’s climate, ecommerce stores need to keep up with their competition as well as add a differentiating factor.

Many small businesses are providing limited-time percentage discounts on full-price items to encourage purchasing and finding innovative ways to offer value to their audiences, whether it be on social media or an ecommerce store. Their messages are both compelling and sympathetic, enhancing the overall customer experience.

How can you create a promotional strategy that saves your bottom line in times of crisis and increases profit margins as you scale? We’re here to break it down.

Customers Genuinely Like Shopping Discounts

When I think back on some of my favorite experiences with brands I love, I find one thing in common — the brands I am loyal to have made me feel important and valued.

Across different brands, I’ve been included in engaging loyalty programs, offered exclusive discounts, and unlocked access to high-quality content.

And, it turns out my happiness from these brands traces back to science.

In a study completed in 2012, researchers found that coupon recipients who received a $10 voucher experienced a 38% rise in oxytocin levels and were 11% happier than those who did not receive a coupon.

This discovery holds true across various generations as well. In a study by Bizrate Insights, consumers, on average, deemed discounts and coupons to be ‘very important’ during their digital purchasing decisions. Notably, younger consumers find discounts and coupons more important than older generations.

While there is a lot of positive data confirming the value of a strong promotional strategy, it’s important your business, no matter the size, takes the necessary steps to protect your bottom line when brainstorming ways to offer more value to your customer base.

Why Should Online Stores Offer Customer Discounts?

Something I love about data — it doesn’t lie. While we know the numbers look promising, here are a few other reasons why online stores should offer customer discounts.

1. Attract new customers.

What’s a better way to attract new customers than with a promo?

With a promotional offer, you can tailor your organic and paid content to communicate the message. Maybe it’s related to a new product or service or an upsell opportunity by offering a free gift with purchase.

Here’s a great example by LARQ.

[

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Take $20 off your purchase and pay it forward to @DirectRelief supporting healthcare heroes working in the frontlines of COVID-19. Do good. Feel good. We're in this together ✊⁠ ⁠ From now till April 30th.

A post shared by LARQ (@livelarq) on Apr 7, 2020 at 11:32am PDT

Promotional offers give your business an opportunity to create engaging marketing content that speaks to your brand — while adding in a layer of excitement and urgency with the discount offer you’re providing to customers.

2. Build customer loyalty.

Consumers love being rewarded. So, when you offer exclusive discounts or promotions to your customer base — they’ll feel both excited and valued.

Promo codes that customers can enter in the shopping cart or checkout are great ways to tap into your existing customers’ commerce experience. Try sharing these exclusive coupon codes to your email subscribers in your next email marketing campaign.

3. Increase sales.

While promotions are a cost to your business, they also have the power to increase your sales.

Implementing a discount strategy adds a layer of time sensitivity to your customers’ purchasing journey. In turn, you’ll likely see an influx of purchases during the duration of your offer.

An added perk? Discounted prices can lower your cart abandonment rate. Make sure your offers are easily accessible on your ecommerce store.

4. Drive site traffic.

Prepare your ecommerce site for increased traffic if you’re looking to implement a promotional strategy.

As you market new offers (and as your customers spread the word), you’ll likely bring more visitors to your site. Keep in mind, many of these visitors may be new, so make sure you’re serving up an optimal customer experience to win their business. Discount codes sweeten the deal, but it’s up to your marketing and user experience to bring in conversions.

Setting Your Ecommerce Site Goals for Customer Offers

Depending on your niche, size of business and budget, you may offer different types of offers.  For example, you need to have goals for why you are providing discounts and free shipping.

Truth is, discounts aren’t the right solution for every brand or product. Think about how you want to position your brand and which of these promotional goals are most relevant to your business.

1. Acquire new customers. 

Are you new in business? Or simply looking to grow your customer base?

Consider offering a welcome offer to new customers if they subscribe to your email newsletter.

2. Increase sales.

Looking to grow your revenue? You’ll want to do a little research on your current marketing performance.

What’s your current cost of acquisition? What’s your average customer lifetime? How are your customers converting now?

Understanding this behavior will help you navigate your promotional strategy and understand where you will get the most bang for your buck.

3. Gain repeat customers.

For industries like furniture, it can be difficult to find repeat customers.

A great way to tap into one-time converters is to offer kits + bundles that support the product they already purchased. For example, let’s say a customer purchased a bed frame. Offer a discounted bundle for the mattress, sheets and duvet.

In addition, find ways to engage with existing customers on social media. This will help garner feedback and make it easy to communicate new products to them.

4. Get rid of old inventory.

Sometimes, we make or stock too much product. Discounts are a great way to get rid of old products (instead of putting it to waste).

When customers visit your online store, try implementing a popup leading users to extra inventory. On these product pages, you can try crossing out the original dollar amount with the new, discounted pricing in a contrasting color.

6 Types of Customer Discounts

As you can predict, there are many different ways to execute promotional strategies. Here are six types of promotions you can use.

1. Bundled discounts.

2. Prepayment discount.

3. Volume discount.

4. Event/seasonal discounts.

5. Free shipping.

6. Buy one, get one free.

1. Bundled discounts.

Kits and bundles. Personally, this is one of my favorite promotional strategies because it’s more focused on added value versus highlighting discounted retail prices. Here’s more on why I love this option.

Bundling increases the number of items you sell

Hello to all of the upsell opportunities! Offering products in bundles and kits allows you to increase the total number of items you sell. In turn, this will also increase your average order value.

If you have products that range widely in price, this is a great way to offer a solution that highlights the value customers will get by purchasing items together.

Sell popular and less popular products together

Maybe you have products that aren’t converting as well independently, but complement other popular products. Try creating kits that include less popular but related products to sell more of your inventory.

Customers get to try your other products

Creating a bundle can be a great cross sell solution to introducing your customers to products they may have not originally purchased, or even new products that you want to introduce.

2. Prepayment discount.

Oftentimes, you’ll find this type of discount when booking a hotel. For example, if you pay for your hotel room in full at booking, you may receive a discounted price versus paying at a hotel at the end of your stay.

These discounts are great for more expensive items — think furniture, jewelry, or designer clothing. This is also a great solution for B2B businesses.

3. Volume discounts.

The more you buy, the more you save!

This discount is very popular in the apparel industry — especially for more expensive retailers who are looking to incentivize shoppers to convert with them.

This can also work for B2B businesses looking to do more businesses on specific products. Think of it as a tiered pricing strategy.

4. Event or seasonal discount.

The greatest example of this promotion type is Cyber Weekend. The weekend coined as the start of the retail holiday season that offers some of the steepest discounts of the year!

Events like Christmas or birthdays are great opportunities to capitalize on seasonal or annual activities. For these holidays and events, consumers are, year after year, going to be looking for products for these celebrations.

Consider offering a birthday discount to customers or a one-day annual sale with exciting discounts and offers.

5. Free shipping.

There’s no denying that free shipping is a hot topic — and we have the era of Amazon Prime free two-day shipping to thank.

While shorter delivery times are becoming more popular, many customers are still willing to wait longer when offered free shipping.

I highly recommend doing research to see how much your customers value free shipping. Are your customers willing to spend $100 to get free shipping or will they only spend $50? These tests will help you implement free shipping in a way that boosts your promotional strategy.

“Amazon has changed the game around consumer expectations for both delivery times as well as costs. Brands should test out pricing strategies that include the ability to support some sort of free shipping tier to drive real growth. Consumers will often pay a few extra dollars for a product that can be here sooner and has “free shipping” (even if the true cost of that shipping was just actually baked into the product).” — Adam Grohs, Co-Founder/CEO, Particular.

6. Buy one, get one free.

Essentially 50% off two products — what more can you ask for?

‘Buy one, get one free’ is a great strategy if you want to boost cross-sell opportunities.

Try implementing this with products that complement each other or perhaps two of the same product type (e.g., buy one graphic tee, get one free).

Using Customer Offers At Unique Moments

Promotional strategies don’t only live at the beginning of the customer journey. In fact, offering promotions or discounts at unique moments in the customer journey can strengthen your customer experience and increase conversions.

1. Abandoned cart offers.

Many ecommerce managers are looking for ways to reduce abandoned carts.

To achieve this goal, implement offers in your abandoned cart emails.

2. Exit-intent offers.

Offering exit-intent popups are another option to engage with customers before they depart.

Maybe your customers didn’t see an existing offer or couldn’t find what they were looking for.

Try highlighting an offer in an exit-intent popup and collect data on how effective this communication is for conversion rates.

3. Referral offers.

Are you a brand that is new to the market? Referral offers are a great way to encourage your customers to spread the word while rewarding them for doing so!

Some brands implement a tiered referral program (e.g., for every 10 friends to sign up, you’ll receive a different swag item) or offer an exclusive promo code for every friend that converts with the brand using an unique link.

4. First-time shopping offers.

First impressions are everything. I think we have all scoured the internet once to find a welcome offer for a brand we’ve never transacted with.

Whether you are a new brand or looking to grow your customer base, have a welcome offer easy to find on your website.

5. Email subscription offers.

Many brands offer 10% off for customers that sign up for email marketing newsletters. If you offer this option, make sure your email marketing has quality content to continue engaging with customers.

Ensure Profitability When You Offer Discount Pricing

While promotions are exciting and fun ways to incentivize your audience, you need to make sure you’re protecting your bottom line. This is especially important if your business is impacted by a natural disaster or global crisis.

Here are a few ways you can keep your business goals in check and increase revenue (instead of losing it).

1. Be mindful of your margins.

How steep of a discount can you actually afford to offer?

While 50% off may sound intriguing to customers, you’ll need to determine the total cost you’ll take by offering a steep discount.

When offering discounts, be sure to keep a profitable margin. 

2. Look at your customer acquisition costs.

When you offer products on sale, how much you spend acquiring new customers changes. Ideally, your discounts shouldn’t increase your customer acquisition expenses by much.

Understanding your customer acquisition costs and your customer lifetime value will be key indicators when crafting your strategy.

3. Targeted sales volume.

Since increasing sales is a common goal for businesses offering a discount, you need to set your sales targets. This is something you can’t afford to miss. Make sure that your sales targets are high enough that you maintain or, better yet, increase your profits.

Don’t damage your own business by trying to over-promise value to your customers.

Conclusion

Ecommerce businesses today are scrambling to grow online sales. Boosting your promotional strategy with different discounts and free shipping can increase sales and encourage customer loyalty — through good times and bad.

Craft a strategy that rewards your customers and your business, for the long run.