How to discount items

Types of discounts

There’s an art to discounting beyond cutting prices. It’s about creating value for customers and your business alike.

Some common types of discounts include:

1. Percentage-based discounts: A fixed percentage off the original price.
2. Dollar amount discounts: Subtracting a specific amount from the original price.
3. BOGO (buy one, get one) deals: Buy one item and get another for free or at a discounted rate.
4. Quantity discounts: The more you buy, the more you save. These encourage bulk purchases.
5. Seasonal discounts: Offered during specific times of the year, like back-to-school or holiday seasons.

Your POS software will be instrumental in effectively managing these different types of discounts, especially if it allows for real-time inventory tracking.

Discount strategy

A discount strategy is a plan for offering discounts in a way that aligns with your business goals, whether that’s increasing revenue, expanding your customer base, or enhancing brand perception.

Target audience

Does your audience get a thrill from clipping coupons, or do they prefer the simplicity of already discounted items? Are they cart abandoners who could benefit from a “Here’s a 15% off coupon for the items in your cart!” email?

Tailoring your deals to match the preferences and behaviors of different customer segments can help boost the likelihood that your discount strategy is a success.

Timing

Seasonal opportunities, such as holidays and special occasions, offer excellent windows for discounting. In fact, when it comes to events like Black Friday, not running a sale could mean missing out on significant revenue.

Limited-time offers can also create a sense of urgency, encouraging customers to act quickly – that’s why companies love leveraging daily revolving doorbusters or flash sales to drive immediate purchases.

Product bundling

Product bundling involves offering a discount on a package of related products. For example, a skincare brand may bundle a cleanser, toner, and moisturizer together at a discounted rate.

Product bundling can:

• Increase the average transaction value by encouraging larger purchases.
• Clear slow-moving inventory by pairing less popular items with bestsellers.
• Provide customers with more convenience, rather than having them scour for individual but complementary products.

How to write a discount offer message

With discounts being one of the most popular marketing tools among retailers, you’ll need to unleash your copywriting skills to stand out.

Beyond just announcing the sale, make sure to craft a discount offer message that is eye-catching and compelling. Keep these tips in mind:

• Transparency and clarity are key: Clearly state the terms and conditions, including the discount amount, eligibility criteria, and expiration date. Nobody likes hidden surprises – especially when it comes to not getting the deal they expected.
• Ensure consistency across all marketing channels: This reduces customer confusion.
• Leverage irresistible visuals and graphics: Highlight the deal and savings with large fonts and bold colors to make your offer stand out.
• Utilize social media and targeted emails: Not only does this allow you to highlight the value of your discount offer, but it also helps you reach a larger audience.

Monitoring and analyzing discount performance

As you run your promotion, you may wonder: Are customers taking advantage of the offer? How is this promotion affecting my overall sales?

Some ways to measure the success of your discount campaign include:

• Reviewing metrics: Use business analytics tools to monitor key performance indicators (KPIs) such as:

1. Sales volume: The number of units sold during the promotional period. A significant increase in sales volume is a sign that your discount strategy is effective.
2. Customer acquisition rate: The number of new customers you've gained as a result of the discount campaign. A higher rate suggests that the promotion is likely driving sales as well as attracting new customers.
3. Average order value: The average amount spent per transaction during the discount period. An increase in average order value signifies that customers are buying more per visit.
4. Customer retention rates: The percentage of new customers gained during the promotion who return for more later. A high retention rate post-promotion indicates that your discount strategy not only attracted new shoppers but also succeeded in driving their loyalty.

• Gathering customer feedback: Collecting customer feedback can provide valuable insights into their perception of the discount and overall experience.

Use the insights gained to refine your future discount strategies for better results.

Boost business growth by offering strategic discounts

Discounting items can be a powerful tool for small businesses. When done strategically, it can attract customers, increase sales, and clear stale inventory. The key is to align your discount strategy with your business goals, understand your target audience, and monitor performance.

But remember: While discounts are a great way to get customers in your physical or virtual doors, there’s no guarantee they’ll buy. Check out these tips on how to optimize your store for conversions.