The adrenaline rush you get when you stumble upon your favourite items at a bargain price is an experience like no other.
Almost every consumer looks for a way to save money when purchasing. Research shows that a reasonable discount offer is a psychological motivator that can draw customers in and encourage them to buy. That makes discount marketing a powerful tool for boosting sales and customer engagement.
Let’s discover how compelling promotions and discount offers can drive sales, and how you might use this strategy in your business.
What is discount marketing?
Discount marketing involves lowering the prices of goods and services for a limited time. It strategically taps into a customer’s natural love for a good trade by creating a sense of urgency and driving the fear of missing out (FOMO). Discount marketing benefits brands by luring first-time customers to try them, maximising sales, and reducing the shopping cart abandonment rate. For instance, luxury brands often use limited-time discounts to maintain exclusivity while attracting new customers.
Are discounts considered marketing?
Yes! Discounts can boost sales, attract customers, and clear out old inventory, making them a great marketing tool.
Offering a discount at the right time can work wonders. However, offering them too often can create impossible customer expectations you may fail to meet.
An effective discount strategy perfectly balances a brand’s perception and profit margins with the deals being offered.
Things to consider before launching a discount marketing campaign
Market research or analysis of past sales data can give you a better idea of what your customers are willing to pay and how often they expect discounts. This information helps you make informed decisions and reap more benefits from discount marketing.
To determine the correct discount amount and frequency, consider:
- Your product’s value
- Your target market’s budget or purchasing power
- Your competitors’ prices.
A good rule of thumb is to offer discounts that are large enough to attract attention but not so large that they undermine the perceived value of your product or service.
Types of discounts
Discounts work by contributing to consumers’ scarcity mindset. The type of discount offered drives this psychological impact. Here are some of the most common discount types:
- Discount Coupons: A code customers can enter at checkout to get a discount on their purchase.
- Tiered discount: Customers can receive bigger discounts by hitting pre-defined spending thresholds.
- Free shipping: Customers can complete an order and check out without incurring a separate shipping charge.
- Buy one, get one free: Customers get a free or discounted product when they purchase another product of the same or higher value.
- Rebates: Customers who purchase a specific amount of product in units or dollars receive a portion of the purchase price.
- Percentage discount: Customers can subtract a set percentage from an individual item or their final sales total.
- Dollar discount: Customers receive an immediate, tangible saving on their order.
- Bulk discount: The customer gets a lower price than usual by buying a large quantity of an item or committing to ongoing services.
Are discounts a good marketing strategy?
Discount marketing is a tried-and-true strategy. If we talk about discount evolution, Coca-Cola was the pioneer. The soft drink leader introduced its first coupon for a complimentary glass of Coke in 1887. Over a century and a half later, this approach still stands strong, reassuring in its reliability and success.
The best coupon marketing ideas help retain customers, boost average order value, and increase revenue. Studies in 2024 show that coupon users spend about 35% more than non-coupon users. Around 29% of consumers buy more or try new brands with the right coupon, and 68% feel coupons drive brand loyalty and quicker purchases.
Personalised coupon marketing emails have a higher chance of a conversion. We can easily integrate our coupon marketing strategy with email marketing, which helps build personalised, one-to-one interactions with potential customers. You can also promote audience brand interaction by emailing loyalty program members or newsletter subscribers discount codes.
If used right, discount marketing can skyrocket your sales. Here are seven reasons why discount advertising may be a solid marketing strategy:
Boost sales
A good bargain compels people to buy more—however, timing matters. You can spike sales with a holiday sale or coupon during the festive season.
Lures New Customers
Offering a first-timer discount may be a great way to get people to try your products. The right promo code, provided at the right time, can increase your brand’s awareness and create more loyal customers.
Retain loyal customers
The key to success for any business is keeping its loyal customer base happy. Offering a special discount deal exclusively is a great way to make them feel valued.
Spread the Word
A well-designed discount advertisement is shared multiple times online. With a creative discount marketing strategy, you can also leverage the power of word of mouth and increase brand awareness.
Rotate inventory
Every profitable business tends to rotate its inventory. This means regularly introducing new products and removing old ones to keep your offerings fresh and appealing. Seasonal sales or clearance events help you improve your brand’s perception and refresh items by selling leftovers.
Combining this strategy with discount marketing can create a sense of urgency and encourage customers to purchase, especially when trying to sell off older inventory or introduce new products.
Bigger Orders
A good discount deal entices customers to buy more. Offers like buy-more-save-more or free shipping can boost the average order value.
Compete confidently
Offering Promotions and discounts level the playing field for small businesses looking to go head-to-head with the giants.
What is a discounted pricing strategy?
Discount pricing is a marketing tactic to increase sales. The catch is to excite shoppers into buying more. Research shows that finding a good deal releases oxytocin, a happy hormone. Simply put, brands with regular promotions can increase organic leads and retain their existing customers.
Discount strategy changes consumer’s perception of the worth of a product or service. Besides augmenting sales, coupons, codes, sales, and bundles help prevent shopping cart abandonment. Coupon code sites like Brocomo, ClothingRIC, and RetailMeNot provide a very useful service by featuring brands’ coupon codes.
Here’s how to boost your discount strategy:
Offer targeted discounts
A sitewide discount on all categories may put consumers into the paradox of choice. You must focus on customer attention to make the most out of discount marketing. This implies discounting specific product categories is the way to go.
Study buyer’s behaviour
The key to discounting success is not just offering discounts; it’s understanding your customers. Analyse your sales data to learn customers’ preferences. This will allow you to create promotions that benefit both you and your customers.
Using a Windows, Linux, or other OS-based server can significantly help with analytics as it allows you to access and analyze customer data directly on your server. Even more, you can install and use any automation software with ease.
Choose the best discount duration
Don’t train your customers to wait for a promotion. Offering time-specific deals is only part of the equation. Their true purpose is to accelerate purchases by motivating buyers. Open-ended promotions will also lack the urgency that compels buyers to buy more.
The right approach is to align discount marketing campaigns with a specific catalyst. For example, clearance sales may be more effective if they last a week, but new release sales may perform better if they last up to two days.
Timed discounts can also convince customers to make an immediate purchase. This FOMO-based marketing strategy capitalises on scarcity. By decreasing the discount percentage with a ticking clock, you can create an ultimate sense of urgency.
For example, offer a 20% discount during the first hour of the sale and decrease it by 1% with each passing hour until the sale ends. With this incentive, you can urge potential consumers to buy more to get the best value for money.
Conclusion
When done right, discount marketing boosts customer loyalty, and sales and helps rotate inventory. However, even a tiny mistake could hurt your brand’s image and profit margins. Testing different options and monitoring results can help you make informed decisions.
Before launching a new discount deal, consider your customers’ preferences as well as your business objectives. Offer promotions that make sense to your bottom line and align with your brand’s image. Connect to your customers with highly targeted social media ads. Add a discount strategy to your marketing toolbox and give your business the extra push it needs!
“The opinions expressed by BizWitty Contributors are their own, not those of BizCover and should not be relied upon in place of appropriate professional advice. Please read our full disclaimer."
