Offers, coupons, discounts and deals. There will come a time when most online merchants will be faced with the decision of whether to offer discounts, when to offer discounts and how much the discounts should be worth.
Offering discounts for your online store can be a powerful weapon in your conversion arsenal to drive customer loyalty. But, used haphazardly, you can do significant damage to your brand or, worse, become unprofitable.
Here, we’ll review some of the pros and cons of offering deals for your online store, look at some of the most popular ways you can use discounts to drive customer loyalty and conversions and, of course, how to most effectively use them.
Table of Contents
What Kind of Offers Are Ideal for Your Small Business?
Types of Offers, Coupons & Discounts
Using Offers to Drive Sales & Customer Loyalty
Make the Most of Your Offers, Coupons & Discounts
Customer Loyalty
Loyalty is more than just behavior. It is a mistake to assume that a customer is loyal just because they continue to buy from you. There are many reasons why a customer frequents your business that may have little to do with being loyal. Consider the following:
➠ There is a contractual arrangement with your company.
➠ It takes too much effort or money to change suppliers.
➠ You are currently the low cost provider.
➠ Their relationship is with one of your employees and not with your company.
➠ They may actually be in the process of finding an alternative supplier.
True customer loyalty is far more than repeat business. Customers make decisions about where to spend their time and money every day. That's why is important to make your product or service offering the preferred choice. You can do this by building offers that will:
➠ Set you apart from competitors
➠ Generate significant demand by customers
➠ Demonstrate superior value
➠ Build customer loyalty
What Kind of Offers Are Ideal for Your Small Business?
Online store offers can be an effective tool for both customer acquisition and customer loyalty. Taking into consideration your overall brand strategy before offering discounts can be useful in determining how you can best meet your sales goals.
If you want to position yourself as a higher-end brand, you may want to consider sticking to customer loyalty-type offers as opposed to weekly sales. On the other hand, deep discounting and weekly/monthly sales might be better for reaching your goals.
Ultimately, you will need to consider the kind of offers that are right for your brand. Building an online business will generally involve a lot of experimentation to understand what works best. The best approach is to choose a goal for every campaign and offer, start small, and measure the results.
Types of Offers, Coupons & Discounts
There are several types of discounts and offers you have at your disposal. Here are some of the most common.
➠ Percentage-Based Discount.
This can include small incentive percentages like 5% or 10% off, larger discounts to really drive sales like 20% and 25%, or significant percentages like 50%+ to liquidate merchandise that’s old or isn’t moving.
➠ Free Shipping.
Shipping costs are one major reason for shopping cart abandonment. Offering free shipping is a great way to mitigate this and increase conversions.
Use free shipping offers in conjunction with a minimum purchase requirement to increase your average order value.
➠ Free Gift.
A free gift with a purchase can be a great way to provide additional value to customer. If used strategically, it can also be used to increase average order size and/or to get rid of product that isn’t moving.
Using Offers to Drive Sales & Customer Loyalty
There are many ways you can use sales, offers, discounts, and deals to drive customer loyalty, acquisition, and conversions. Below are some of the most popular.
➠ Email/Newsletter Subscription Offer
➠ Customer Loyalty Program Membership Incentives
➠ Offers for Purchasing Online
➠ Coupons for Purchasing In-Store
➠ Customer Milestone Discounts
Weekly & Monthly Discounts
These are traditional sales used to drive conversions. Many times sales are used at the end of a month or quarter to increase revenues. The online photo department at Walgreens has weekly sales and coupon codes, as well as ongoing promo codes at the bottom of the page.
Prelaunch Offers
If you’re in the prelaunch stage of your Small Business or launching a new product or service, you can use prelaunch offers to drive traffic and peak interest, turning new customers into loyal customers.
Consider offering free gift cards in exchange for customers’ email addresses and time to fill out a brief survey. You can kick off this initiative by manually reaching out to potential respondents on LinkedIn.
Holiday & Seasonal Deals
Although Black Friday and Cyber Monday are among the favorites, the entire year is sprinkled with national and commemorative holidays that provide an opportunity to share relevant discounts and offers with customers. Blu Skin Care regularly makes use of holidays to promote offers to their visitors and past customers. They promote these in different ways: email, social media, markets, and on their website.
Email/Newsletter Subscription Offer
Building an email list is extremely important for online retailers. By providing an offer in exchange for visitors’ email addresses, you increase the chance of a conversion. Having their email address also provides you with an invaluable opportunity to build a relationship, foster customer loyalty, and market to them in the future.
Online retailer Overstock.com offers a coupon for 15% off your purchase for signing up to receive their newsletter.
Social Media Incentives
One of the most challenging aspects of operating a new online store is getting the word out. Giving visitors and customers an incentive to share your store within their social circles can be an effective way to create inexpensive word-of-mouth. Consider offering customers $5 off their next purchase in exchange for them sharing about the brand and experience on your Facebook Business page.
Referral Promos
People are much more likely to purchase from you if referred by a friend or family member. Use this to your advantage and leverage offers to encourage referrals. You can choose to give a deal to the person referring, the person being referred, or both. Meal-delivery brands like Blue Apron and Hello Fresh are doing some innovative things.
First-Time Shopper Offer
Providing a first-timers offer could be just the nudge a first-time visitor needs to be converted to a paying customer. Clearly provides all new visitors with a discount on prescription glasses, contact lenses, and free shipping. DODOcase, an online manufacturer of iPad cases, offers discounts on your first purchase.
Minimum Purchase Discount
An offer based on the total value of a shopping cart is an effective upselling tactic to encourage customers to spend more, increasing your average order size. You can offer minimum purchase discounts for specific products and services. If there are particular items you want customers to focus on, try adding a minimum purchase discount to incentivize your audience.
Check out popular online retailer Nasty Gal for their current promotional offers.
Exclusive Social Offers
Exclusive offers on your social networks can be a great way to build customer loyalty with those who follow you. Plus, this tactic provides a reason for new people to follow and subscribe to your social channels, which will allow you to market to them in the future as well.
Customer Loyalty Offers
Rewarding customer loyalty can build an even stronger bond by providing discounts only to customers who already spend money with you. It can be as simple as sending your best customers a personal email with a discount or credit, using an automated email marketing app like Klaviyo to send email offers when someone makes a certain number of purchases from your store.
Customer Loyalty Program Membership Incentives
Rewarding customers for joining your customer loyalty program is an ideal time to share a bonus incentive. Big Lots offers all kinds of incentives for joining their customer loyalty program. Customers can redeem the reward either online or in-store.
Offers for Purchasing Online
If your goal is to drive online sales, consider incentivizing online purchases. Dick’s Sporting Goods is currently incentivizing "Sign Up For Email and Get 10% Off".
Coupons for Purchasing In-Store
Just as you can drive online sales with offers, you can also drive in-store sales. This can be at your brick-and-mortar location, or at in-person events such as festivals, fairs, expos, trade shows, etc.
Bed Bath & Beyond are offering 20% off entire purchase when you buy online and pick up in store.
Event Attendance Offers
If you host events, in-person or virtually, you can reward attendees with discounts or free gifts. These discounts can be given during the event or after the event. This helps to cultivate the relationship with engaged customers, increase customer loyalty, and encourage attendance for your next event.
prAna’s having an END OF SEASON SALE. 50-60% Off + Free Shipping. You'll need to read the fine print.
Customer Milestone Discounts
These milestones could be personal to a customer — a birthday or wedding anniversary. Other milestones can celebrate the relationship you’ve built with one another. Those would include the anniversary of the customer’s first purchase, spending a certain amount of money, making a certain number of purchases, or various engagements with your brand. Big Lots rewards customers on their birthdays with extra discounts and free gifts.
Make the Most of Your Offers, Coupons & Discounts
If you start with a clear goal in mind, firm understanding of your brand, and willingness to experiment, you can effectively use offers to meet your objectives, build customer loyalty, and increase revenues.