Discounts and Its Benefits for an Ecommerce Website

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In this digital marketing and SEO age, promoting a business venture is now easy. Many business owners have developed unique promotion strategies to expand their reach and popularity.
Corporate discounts are now one of the best practices to engage more customers for your eCommerce business. The millennial generation, as well as the office goers, are now living a fast-paced lifestyle. Discount offers and promotional codes are a great way to attract them as buyers for your business.
Discount price marketing, done correctly, can help an eCommerce venture gain loyal customers in both good and bad times. It also helps with the brand value and reputation of your eCommerce business.
Hence, in this article, we will tell you all about corporate discounts and how they can benefit your eCommerce business venture in both the short and long run.

How to Use Discounts to Boost Your eCommerce Sales?

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1. Do the Prep Work Beforehand

Preparing your discount strategies for the business beforehand is imperative. Discount marketing, without any doubt, will get your business the engagement it needs, but it can also damage your profits without any solid prep work.
So, in prep work, you need to set some boundaries around your discount marketing strategy. You need to define some ground rules regarding when and how you can offer a customer a discount code.
Setting firm objectives and figuring out a different approach to your goals ensure your Ecommerce will not sustain any profit damage.

2. Know the Suitable Type of Discount for Your Ecommerce Business

There are many kinds of discount marketing strategies in the market. Computing correct metrics for your business will give you an idea of which approach will work for your business.
When you hire ecommerce SEO specialists for your marketing campaign, discuss your discount strategy. They will explain how effective it can be for your business.
Setting the right goals and applying an effective discount strategy will get you responsible discounts and sales profits.

3. Watch and Learn from Your Competitors

When you start a new eCommerce venture in your locality, it is better to observe your business competitors as references. It will get you a fair idea about the types of customers you will be dealing with.
When you can define your target customers, you can study their buying patterns. As per the study, you can define your business promotion strategy. It will help you develop the type of advertising, corporate offers, and other marketing strategies your eCommerce business needs.

4. Define A Meaningful Discount Pricing Strategy

A meaningful discount pricing strategy will not hurt your sales profit. It is essential to align your discount strategy with your brand. It will differentiate your brand position from your local competitors.
When you advertise your products at a discount, you must be confident in their value. The strategy and tactics are more important for your discount pricing marketing.
Hence, it is vital to develop a solid framework to deploy effective discount pricing tactics for your eCommerce business.

5. Terms and Conditions of Corporate Discounts

As an eCommerce business, it is crucial to provide corporate discounts on your products. But defining terms and conditions are more important than the discounts themselves. Setting a set of discount conditions for your customers will increase your sales profit.
Consider the following example. If you offer a discount coupon of 20% off to your customers on shopping over 1000 and 30% off on shopping over 2000, more customers will likely shop over 2000. Such tactics will help you maintain your sales profit and get your customers a responsible discount offer.

6. Understand the Concept of Deep Discounting

As per basic economics, demand goes up when the price goes down. This concept holds for usual discounting practices.
For example, a 10% discount on a product will get you a surge of 10% in your sales. Increase this by another 10%, and you will see a lift of 20% in your sales. This discount pricing is standard, and a customer will accept this.
If a product has a 70% discount on it, human psychology questions its quality and legality. It is known as the “deep discounting” effect. So, beyond a certain point, discounts do not have any impact on sales.

7. Make Your Customers Earn Discounts

When you provide a customer discount, make it look like they have earned it. At least, it should look like their consistent engagement with your platform has earned them discounts.
In the long run, an eCommerce needs to reward its loyal customers. It will help your business retain old customers and lure new ones. So, whenever you deploy a discount pricing strategy, make sure you reward your loyal customers first. Then you can work backward to your early birds.

8. Know your Customers Then Apply Eligible Discounts

Before sending out discount notifications to your customers, study their buying patterns. Many customer retention studies show customers who buy at a 15% discount all year long are more loyal than customers who buy at a 50% discount.
So, it is safe to set your discount pricing up to 30% on your products. Beyond the 30% limit, your business can lose its brand value due to pricing trust issues.

9. Create the Hype Before Giving out Discounts

Giving out discounts at random to your customers can surprise them and a profit to your sales. But it does not always work. Surprise your customers, but create the hype by promoting your brand to get the most out of your discount pricing marketing.
Let your buyers anticipate and expect your business to engage during your discount period. Creating a social media campaign for your discount promotion will get you more customers and sales profits.

Importance of Offering Discounts in eCommerce Business

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1. Easier Business Promotion

Promoting a local business is now easy due to different SEO strategies. One of those strategies is discount pricing marketing. Giving out discount codes will attract more customer engagement to your eCommerce.
It will ensure your business promotion reaches the distance you need via word of mouth. Advertising your discount sale also helps your business with its promotion. It will generate more revenue, making you a considerable amount of sales profits.

2. Increase in Sales

Discount pricing not only engages old customers but also woos the new ones. More customers mean better sales. If you deploy an effective discount pricing strategy for your eCommerce business, then you will get a significant surge in your sales chart.
Providing discounts at the right time to the right set of customers can bring you up in your local business ranking in no time. Increased sales also mean you can have more profit upfront during the discount sale window.

3. Brand Recognition

When an eCommerce business provides discount pricing to its customers, it promotes brand recognition for its affordable costs. Your business will develop a reputation as the place with a great collection of products where buyers can find great prices.
It will get you the optimal word of mouth promotion in your business area. It will also increase your brand value and credibility of your products. It all boils down to finding effective discount pricing tactics for your business.

4. Improve in Cash Flow

Offering discount pricing to your customers can get you a steady cash flow. It will give your customers a reason to pay you upfront. As an eCommerce business, if you have 30-day terms for invoices, then you might consider offering 3% discounts to customers who can pay within 15 days. It will accelerate your customer payment by several folds.
Such tactics will give your buyers a meaningful financial advantage. It will also ensure smooth revenue management on your part.

5. Reduction in Excess Products

As an eCommerce business, you deal with different products at your disposal. Some products have longer shelf lives, and some are perishable. Products with limited shelf lives can be tricky to handle and sell.
It may be better to sell off those products than to keep your prices high. You can include discounted prices to sell off products with shorter shelf lives to create room for the fresh ones. It will ensure there is no crowding of expired products in your inventory.

6. Resolving Customer Complaints

Giving out discount pricing is one of the most popular ways to resolve a customer’s issue in an eCommerce business. As an eCommerce business, you will receive numerous customer feedback and complaints about your products and services.
When a customer calls to file a complaint about a specific product, offering a refund or a discounted pricing may be an effective way to resolve it. It will retain valuable customers for your business and increase your brand loyalty.

7. Quicker Business Expansion

When your eCommerce business is ready for expanding into a new market, discounted pricing and lucrative offers can play a significant role. It can generate interest and motivate potential buyers to try out your products in the new area.
During your business expansion, referral discounts are a great way to get potential customers in a new area. People are more likely to try out your products if someone they trust refers the products to them. Hence, providing discount pricing and promo codes in a new operation area will get you faster business expansion.

8. Resolving a Competitive Threat

In the B2B space, eCommerce companies try to avoid discount pricing. It opens up an opportunity for your potential competitors to capture the market by using lower pricing on products.
Businesses keep a back-up discount strategy for customer retention and minimizing sales loss to address the competitive threats. Hence, whenever you want to promote a discounted sale, make sure to have a back-up strategy to tackle any arising competitive threat.

9. Creating Brand Loyalty

We have already talked about how discount pricing can help a business build its reputation and brand loyalty. As per an SEO study, loyal customers can get you a steady revenue flow around the year.
Offering customer loyalty-based discount is an excellent incentive for your loyal customers. It will encourage your customers to return to your business for future purchases. This type of discount should be extremely exclusive with defined conditions for your loyal customers.

List of Benefits You Will Get by Offering Discounts on an eCommerce Site

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1. Getting New Customers

Discounts serve as a ploy to engage more customers for your products. People love to buy discounted products. So, discounts attract potential buyers, old and new.
To create an opportunity for new customers, limit your discount sale for a certain number of days. People are more likely to rush to your business if they know they only have few days to avail of the discount pricing. You can employ more staffers to ensure a smooth shopping experience for your customers on discounted sale days.

2. Retaining Repeat Customers

While it is imperative to get new customers for your eCommerce business, retaining the old ones is essential. Getting your old customers to join your business’s loyalty program will get you consistent revenue.
Loyalty based point system for your old users is a great way to ensure they engage with your business whenever they want to purchase some products. You can get them exclusive loyalty discount codes on different products for their trust in your industry.

3. Increase in Site Traffic

Whenever you plan to roll out a promotional offer for your eCommerce business, prepare your website for increased site traffic. Getting your website revamped once in a while will ensure your site can handle more customer visits at once.
As you market your new offers, your site will likely attract more potential buyers and visitors. Hence, as an owner, make sure your site is optimized to provide them with a smooth user experience. It will increase your profit and reputation as a brand.

4. Increase in Sales Profits

An increase in site traffic will increase your total sales as well as profits. The discounted sale will attract more customers, but it also helps you engage those customers with other products in your inventory.
Consider the following example. The potential buyers may go for an undiscounted product such as a shirt or t-shirt to complete their purchase if you have a clothing eCommerce store with discounts on trousers. So, discount prices can help an eCommerce store with an increased sale across the board.

5. Increase in Driving Volume

Now eCommerce businesses follow a standard pricing strategy to extend financial opportunities across a customer’s business units. A Volume discount is an incentive for customers who buy more products.
Offering a volume discount can urge customers to buy your products in bulk. Studies show that customers prefer a two for one deal to a 50% off discount. Hence, if you have a wider-reaching of customers, then offering a deep discount on a bulk quantity of products is more effective. This tactic can fill-up capacity and increase purchase power with the suppliers.

6. Getting Rid of Old Inventory

Discounting items let you free up your inventory. It is a great way to make some space for your new and fresh collection for your business.
Every eCommerce business has items that don’t sell too often. So, a large stock of those is often piled up in the inventory. The discount sale is a great way to eliminate those unwanted items with deep discounting offers. By discounting old products, you increase the chances of their sale. It will free up your inventory space for a fresh collection of products.

7. Low Customer Acquisition Cost(CAC)

Understand the customer acquisition cost for your eCommerce business. Study the deviation in CAC pre and post discount sale for your business. In ideal conditions, your discount should not increase your CAC by much.
When you offer a product at a discounted price, more visitors go through your site during that period. It is always essential to study your average CAC and customer lifetime value before devising a discount pricing strategy for your business.

8. Boost in Brand Reputation

Exclusive discounts are a great way to give your brand reputation a boost. An eCommerce business that offers discounts to loyal customers, elderly, or military personnel can increase their reputation of being exclusive and credible.
When a business helps needy people by giving them deep discounts on products, it shows that the company is trying to help people. Many people regard eCommerce businesses as a money-hungry venture. Hence, discount selling can deviate from that perception and increase your brand reputation.

9. Help Your Business with Cash Discounts

We have already discussed a surge in sales due to discount pricing for an eCommerce business. Along with the rise in sales, discounts may help your business save up money if the discount includes payment methods.
Online payment via credit and debit cards may cost you processing fees and time. It means you lose money as compared to cash transactions. Hence, to promote cash transactions, you can give your customer a nominal discount when they pay cash. It will help both your business and customers alike.

Types of Customer Discounts You Can Offer in an eCommerce

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1. Early-Bird Discounts

There are so many ways to woo a new visitor to buy your products. You can nudge a unique visitor with a pop-up to give their email address in exchange for a discount code. Such offers are known as the early-bird offers for an eCommerce business.
Early-bird discounts are a great way to engage new customers with your products and services. You can mail them a coupon or auto discount their cart value once they use your site to purchase an item for the first time.
You can send newsletters and exclusive discount codes to your new customers for the first month of their joining to engage them with your products and services.

2. Loyalty Based Discounts

As per an SEO survey, making a loyalty club for an eCommerce site can help retaining old customers. So, if you do not have one, it is time to make a loyalty club for your trusted customers. You can make your loyalty discount exclusive to your loyalty club members for more engagement.
Accenture report shows that more than 60% of customers want to have personalized offers based on their shopping history. Hence, giving out customized offers to your loyal customers will increase their engagement and give your business trustworthy “word of mouth” marketing.
Popular brands lure new customers based on their loyalty club reviews and offers. They also roll out occasional loyalty discount offers for new customers to be a part of their loyalty club.

3. Seasonal Discounts

These discounts tend to happen during festivals or a specific season, depending on your customers’ shopping habits. These discounts can also occur during holidays, such as promos for New Years’ or Christmas.
As per your customers’ buying habits, you can roll out discount codes for your buyers. For example, some eCommerce businesses tend to give out freebies and coupon codes in December. Others create events at the end of a season to give out discount codes to their customers.
You need to find out what works for your business the best. Then you can devise a plan to roll out discount coupons for your customers.

4. Referral Based Discounts

If you are a new eCommerce business or expanding your business to a new region, then referral-based discounts are the best way to get more customers. It will encourage customers to promote your business for rewards. You can also include first time shopping offers into it.
Many eCommerce businesses opt for the tier-based referral program. They will give you a task to get your friends to sign up. And, in return, they will provide you with an additional discount on every successful signup. Some businesses acquire new customers via a unique link referral system.
Referral discounts increase the brand loyalty and credibility of your business. Hence, it is a powerful marketing strategy if you are an online delivery business.

5. Buy One, Get One Free

It is a tactic that works when deep discounting on prices does not work. Sometimes just by hearing the word “free,” customers tend to shop more. Getting a free product increases the chance of a sale and attracts more buyers to your business.
Studies found that customers choose to shop for free products rather than a discounted one. The same research shows that more consumers prefer to avail themselves of the “buy one, get one free” promotion than any other discount offers. It happens mostly because our mind can easily comprehend the word ‘free.’

6. Reduction in Abandoned Cart Pricing

Many clothing and food-based eCommerce sites use the tactics to lower an abandoned cart price to lure customers. As per a survey, consumers have many factors to abandon their cart products. Shipping charges and handling fees are the chief reasons for cart abandonment.
As an eCommerce site, you can lower the abandoned cart price for getting back your customer engagement. It will also ensure that the customers may buy the existing products at a discounted price. In addition to that, you can nullify the extra charges for an abandoned cart to get visible sales results.

7. Bulk/Volume Discounts

Offering volume discounts to your customers is a great way to speed up your sales. When you offer your customers a volume discount on purchase, they end up paying less per item as long as they buy a bulk of them.
For example, if you are a clothing eCommerce site and someone is buying one pair of jeans, then let them know if they buy two pairs of jeans, they will get 20% off on their price. Volume discounts are a great way to clear up your inventory for new products. They increase the average value per order for a product.

8. Exclusive Discounts

It is a type of discount that can change customers’ perception of the eCommerce industry. People often have a money-hungry perception of the eCommerce industry. Exclusive discounts can bring in a change in that perception among your customers. It will make them realize that the eCommerce industry is not all about money and profit.
Exclusive discounts can include deeply discounted products for our society’s economically weaker section. Elderly citizens and military personnel can also avail of an exclusive discount on products. Such tactics can help your eCommerce maintain a healthy reputation among your customers.

9. Free Shipping Discounts

Several SEO marketing studies show that offering free shipping on a product can increase sales. It can also minimize the cart abandonment rate on your business site. As per a leading business magazine survey, high shipping costs can result in cart abandonment and negative reviews on products.
It is wise to give your customers free shipping options on a purchase, but there is a downside. Free shipping means you have to cover the shipment’s handling and delivery charges. If you are working with low margins on products, this can hurt your business.
Hence, it is wise to give out a free shipping option to customers when an order reaches a certain amount.

10. Prepayment Discounts

You can offer a small discount to your customers who can pay for products in advance. Prepayment can help your business by building a cash flow and boosting your overall revenue generation. You can use the prepayment amount to restock your inventory with fresh products.
Prepayment discounts are popular among online food chains and clothing sites. Many eCommerce sites offer their customers two billing options for payment. Customers who choose the prepayment option get an additional discount for their business trust.

When and Where Should an eCommerce Business Give Discounts?

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1. Product in Decline

When sales of a specific item in your inventory goes down, it is time to put it on your business site’s discount section. The decline in product sales means the need for that product is declining.
When you face such a scenario as an eCommerce business owner, you have two options. Either you replace the product with an upgraded one or put discount pricing. When you discount the product’s pricing, you may make less profit. But it is the only way for you to get your customer retention back on track.

2. New Product Promotion

When you launch a new product into the market as an eCommerce site, you want it to have more exposure and sales. Many eCommerce websites are devising discount pricing for their upcoming products as a promotional strategy.
Pre-order sale of a limited-edition commodity is one of the trending strategies. Businesses offer early-bird discounts on these pre-order purchases to create the necessary hype required before a new product release. It helps with the promotion strategy of a new product in the market.

3. Stock Clearance of an eCommerce

If you are a clothing-based ECommerce Company, you experience excess stock at the end of a season or a year. The need to clear out your inventory for the new products is a good enough reason for you to put your old stock in the discount section of your site.
However, if you plan on giving out a discount on every old stock that you have, that could hurt your business sales. Implementing an effective tactic (Flash sales, Buy more and get more) for your stock clearance sale can get you ample profits and customer engagement.

4. On Customer Subscription

Low customer retention is one of the worst nightmares an eCommerce business owner can have. It is difficult for an eCommerce business to stay afloat after a low customer retention rate. It costs more to get a new customer than to retain an old one in simpler terms.
So, when you get customer engagement on your business site, make sure you treat them with subscription-based coupon codes. It will create more opportunities for you to win their trust and retain them in the future.
Hence, when a customer subscribes to your business site or newsletter, make sure they get regular updates on discount sales and coupons.

5. Annual or End of a Season Sales of Your Business

If you are a clothing eCommerce business, you have to face excess stock and limited stock. One of the best ways to get rid of your old supplies is to create an event either at the end of a season or on any specific day of the year.
It will allow your inventory to have more space for fresh collections. Providing customers with flash sales and buy more, get more like offers are useful in the long run for any eCommerce business. It will provide your eCommerce business with opportunities to experiment with its discount pricing strategy.

6. On Value Added Offers

Value-added offers can be anything. Value-added recommendations can range from a thank you note to a free product depending upon a customer’s loyalty to the business. It is given to customers with higher engagement and purchase history with an eCommerce business.
You can nullify service tax and delivery charges for a loyal customer’s order as a value-added offer. It will engage your old customers and increase your brand loyalty.
Many brands send out a token of thanks or small gifts to loyal customers’ addresses for their continuous support for their business. An appreciation note with the order will make your customers think of your brand if they want to purchase the same product again in the future.
Get in touch with our ecommerce SEO experts to know more about the eCommerce Promotion Strategies.