When it comes to buying goods and services, consumers want the best bang for their buck. They often do this by scoring a great deal, which is why online shopping is so popular. Online shoppers can browse and purchase items from the comfort of their homes or while on-the-go, without having to wait in long lines or fight over merchandise with other consumers. A few times a year, consumers get the thrill of hunting down the latest gadget or toy when Black Friday, Cyber Monday and Green Monday roll around. However, this kind of shopping can be dangerous for the wallet.
A sales discount is a marketing promotion that reduces the price of a product or service. These promotions can be used by businesses to drive sales, clear out inventory or create demand. In addition, they can be used to target a specific demographic or segment of customers. For example, meal-delivery brands like Blue Apron and Hello Fresh use a referral program in which new customers are gifted promo codes they can share with friends. These friends can then redeem their first box for free or at a steep discount.
These types of sales discounts can be a great way to move unwanted or aging inventory, while still giving consumers value. For example, retailers may offer clearance deals in the fall to move out the previous season’s clothing and shoes and bring in the next. In the winter, they might offer hefty discounts on space heaters to help their customers make it through the final days of the season.
Another type of sales discount is a multi-buy promotion. For example, “buy one, get one” offers can be a great way to encourage sales without killing average order values or basket sizes. However, these kinds of promotions need to be carefully planned out, especially when it comes to non-commodity goods, such as apparel and electronics.
If you are unsure whether or not to run a sale on a particular item, we recommend testing out different promotion formats. If you do choose to lower your price, we recommend doing so slowly and in increments to avoid having your Buy Box suppressed by Amazon, which can significantly impact profitability.
While offering a discount can increase the likelihood of a customer converting, it can also create negative perceptions about your brand. Customers get used to low prices and might expect you to maintain these prices moving forward. This can cause them to lose faith in your brand and value proposition, and some will opt not to shop with you again. It is crucial that you understand your customer base and marketplace before implementing any sales discount. Otherwise, it could damage your brand image and derail your sales efforts.