What Is The *Highest* Discount You’re Prepared To Offer?

However, as effective as they are, discounts can be a double-edged sword. While slashing prices certainly attracts customers, executing discounts the wrong way could end up killing your profits or enticing the wrong types of shoppers (i.e. those who’ll only buy from you when you lower your prices.)

That’s why if you’re looking to run sales or discounts at your store, it’s important to plan your promotions well and craft thoughtful offers to meet your objectives. Here are some tips to help you get started when thinking of slashing your prices.

1. Define your objectives

Why are you doing the discount? Are you doing it because you want to gain new customers or are you looking to engage existing ones? Do you want to lure in people who haven’t bought from you in a while? Are you looking to get rid of excess stock? These are just some of the questions you should answer when crafting your offers.

Clearly defining your purposes for discounting will enable you to make decisions on what products to put on sale, when to do it, and most important, how big of a discount to offer, while taking out the time measure your findings.woman holding bag beside mural painting

2. Segment shoppers and tailor offers accordingly

One way of doing this is to set up customer profiles. Create profiles outlining the price sensitivity and shopping habits of different customers and use them as tools to determine the kinds of discounts to offer each shopper type.

3. Make sure the timing is right

This is why you also have to pay attention to when shoppers are buying from you. For instance, if you have a lot of customers who buy at the end of the month, then schedule your offers around that time.

Also remember that the question of when a customer looked at a product or bought something can provide insights into what they might buy next and when. For example, Blue Nile, an online jewellery retailer, times its wedding band emails based on its estimates on when customers got engaged.

4. Be mindful of your margins

To ensure that you don’t give away too much or end up losing money with your discounts, set an “acceptable range of margin” for your products.

woman in black dress wearing brown leather flats

5. Implement psychological pricing

Another way to offer deals without giving away too much or hurting your brand is to implement creative pricing and discount strategies.

6. Run conditional promotions

A good way to protect your margins while implementing discounts is to set conditions. Rather than running blanket promotions (e.g., “$10 off any purchase” or 25% off all items), set certain limits or conditions that customers have to meet before they can redeem the offer.

These conditions could be:

  • Buy x number of items and get % off
  • Spend x amount to save %
  • Buy specific items/SKUs to save %
  • Buy and get one or more items for free or on discount
  • Spend and get one or more items for free or on discount

Whatever strategy you decide to take, make sure you do your research and don’t be afraid to trail and test your offer. If you find it’s not working out the way you planed feel free to adapt and change it.

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