We all appreciate a good deal. They’re a fundamental part of commercial culture and present shoppers with a universally recognized value proposition: buy now for less. Regardless of the industry vertical, product category, or commerce channel, deals appeal to our intrinsic desire to save money.
But beyond the financial benefit, discounts also help businesses build brand equity. Shoppers know which retailers offer “good deals” and the ones that don’t. Businesses that know how to turn a simple sale into a cultural event that captures resilient mind-share in the market while simultaneously boosting revenue. Customers enjoy their purchases more knowing that they spent their money wisely. The better the discount shopping experience, the better you’ll retain your customers.
With that in mind, we present the seven most popular types of discounts to help consumers feel as if they got the most bang for their buck.
#1 Bundles
Offer discounts combining multiple products that complement each other. Bundle clothing items that make up an outfit or consumable products like batteries or air filters with their matching appliances. Many customers simply forget that these extra products are necessary. A friendly reminder demonstrates consideration for their needs and an interest in providing a satisfying shopping experience. To maximize conversions, wait until a shopper has demonstrated an intent to purchase before surfacing the deal.
#2 Free Shipping
When it’s time to check out, customers don’t want any surprises. Last-minute price hikes from shipping fees obstruct a customer’s path to purchase. It forces them to reevaluate the cost/value of their transaction. As Brandon Eley, Interactive Director for Kelsey Advertising & Design explains, offering free shipping can have a dramatic impact on your overall conversion: “I decided to make the flat rate shipping the default, and automatically select free shipping for all qualifying orders (in US over $100)… our conversion rate increased by 50% overnight.”
#3 Percentage Discounts
Offering products at a fraction of their original price is a time-tested method for driving revenue. It tells a clear and compelling story that highlights the customer’s perceived value of a product. Percentage discounts are especially effective when the explicit savings you’re may be less than compelling. Telling customers that they’re getting 30% off a $20 t-shirt is more compelling than explaining that they’re saving a grand total of $6.
#4 Buy One, Get One Free Deals
Getting twice the product for the same cost is a clear and intuitive value proposition for your customers. It leverages their pre-existing knowledge of the product and allows them to quickly perform a basic and compelling bit of mental math: same price, twice the value. These deals are most effective around the gift-giving season, when holiday shoppers are almost always looking to cross more than one item off their list.
#5 Limited Time Offers
Scarcity drives conversion. Don’t be afraid to put your users on the spot with a compelling offer that has a short-term expiration. A 2013 study conducted by Digital Commons at the University of Nebraska found that “… strategically controlled environments, by creating product uncertainty, are able to motivate behaviors such as urgency to buy.” Talk to your web developer about implementing countdown timers or other dynamic merchandising features that foster perceived scarcity in your digital storefront. An increase in conversions is sure to follow.
#6 Weekly Deals
Demonstrate commitment to your community by discounting a new product every week. A rapid, consistent promotion cycle keeps users coming back to see new bargains. Alternate between product categories and SKUs and keep selections diverse in order to appeal to the maximum number of customers. This also helps prevent customers from perpetually waiting for a specific sale to come around before completing a purchase.
#7 Dynamic Pricing
While not strictly a “deal” in the traditional sense, altering prices based on market conditions ultimately produces the same effect as universal price adjustments. Between surge pricing in ride-sharing apps and moment-to-moment changes in air travel costs, there’s no shortage of industries that have achieved noteworthy revenue gains by automating their prices. Dynamic pricing has even benefited those operating in the arts space. In an article for PatronManager.com, Gene Carr explains how The Arts Club Theatre Company of Vancouver “… earned $430,000 from dynamic pricing strategies alone, about a 10% increase.”
People of all economic backgrounds recognize the value of a dollar saved. Running regular discounts and deals gives customers a reason to check in with your brand on a consistent basis. Leverage your distribution channels to push out strong messaging in support of your initiatives and, with persistence, your discount strategy will become a celebrated part of your customers’ regular shopping habits.