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Transforming The Customer Experience

Use Discount Marketing To Get Customers to Spend More

Posted Dec 13, 2018 8:00:00 AM

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There’s a lot of concern about using coupons and discounts to lure in customers. Brands with lower profit margins worry that discounts will cut deeper into their revenue, while others worry about creating a coupon-dependant behavior where customers only buy when there is a deal.

Discount marketing can be profitable for your company when done well. You have to set goals for your target audiences and create discounts that actually help your business.

It’s not time to give up on coupons yet. Here are five reasons why discounts actually make customers spend more at your business.

Coupons Create Spending Goals

Marketers are often concerned that discount marketing lowers the average ticket and profit margins of a business. However, when done well, it can increase sales by encouraging people to spend more.

Online shipping thresholds and in-store coupons or gifts encourage customers to reach certain levels in order to receive rewards.

For example, if your business offers $10 off $50 worth of products or services, then someone planning on spending $35 would push themselves to reach that threshold. In actuality, the customer is spending $5 more than they originally would, but they think there’s a higher value because they’re receiving a discount. 

The key to profiting off of threshold discount marketing is to promote the right items to help customers reach their goals.

Retailers use these limits to get rid of clearance items so they can make room for better products. Or, stores and other businesses promote high-margin items or impulse buys that are profitable even with a discount added. They use discounts to get customers to spend more and move inventory that they would otherwise struggle to sell.  

Coupons Move Higher-Ticket Items

If you’re not using coupons to move clearance items and lower-ticket products and services, then you can use them to move high-end items.

Coupons make people spend more and spend recklessly. One study found that families who don’t clip coupons spend an average of $0.51 on soup. However, when a coupon was offered, they spent an average of $0.66. This might not seem like much, but that’s a 30% increase in sales.

To increase sales, consider offering discounts on your higher-ticket items and more expensive services.

For example, a $10 off $50 threshold might make customers opt for a luxury detailing and car tune-up instead of a basic cleaning. Additionally, offering a 5% discount on your luxury services might make customers choose that option instead of the most basic one.

This is why companies on Groupon often offer multiple options. More customers are likely to choose expensive or luxury options to apply their coupons because of the perceived savings and value.

Discounts Make People Happier

The very act of offering a discount can make your audience happier and more likely to buy your products, boosting the overall customer experience

One study found that people who received a $10 voucher saw a 38% increase in oxytocin levels and reportedly were 11% happier than customers who didn’t. Additionally, their respiration rates, heart rates, and perspiration levels all decreased, and they reported lower stress and anxiety levels than their peers.

Happy customers are spending customers. When the people inside your store or business are more relaxed, they’re more likely to find your wares appealing.

They’re more likely to stick around until they find something they like and splurge on a treat that costs a little more. They’re also more likely to have a positive reaction to your brand. You more than likely will make up the discount when customers start spending freely, thinking they are already saving, instead of pinching their pennies at the thought of paying full price.

 

Discounts Convert New Customers

One of the biggest challenges marketers face is converting new customers. They have to move people through the awareness phase of the buying process, convince them to buy, and create an experience that brings them back again. Discount marketing helps guide customers through this process by reducing the risk of trying a new brand.

If customers pay less the first time they try a brand, they perceive lower risk levels than if they paid full price. As long as the brand creates a positive experience, this is all they need to bring customers back again.

Returning customers cost significantly less to convert, and they spend 67% more on average. Focusing your marketing efforts on returning customers and loyalty can dramatically increase your sales.

Offering a discount up front moves customers from the expensive and risk-averse first-time group into the repeat customer audience. Soon, these new customers will become loyal customers who spend freely.  

 

Bundled Packages Increase Loyalty to Your Brand

One of the most popular discount marketing strategies is the “buy one get one” option, where customers either receive a discount on the second purchase or get it for free. This builds customer loyalty and prevents your customers from visiting your competitors to satisfy their needs.

For example, a spa or massage business could offer a 10% discount on bulk packages of four massages or more. This means customers are likely to buy four massages at once instead of buying one at a time. This keeps their business through at least the next four massages. The next time a customer wants a massage, they are more likely to visit your business that offers discounts instead of your competitors.

During this period of additional use, your customers also have time to appreciate your brand and become more loyal to it.

If you’re not able to bundle your products or services but still want to encourage loyalty, consider offering a discount the next time your customers return to the store. Your audience will keep your brand in mind because they know they have discounts waiting for them.  

  

Promote Discount Marketing the Right Way

Discount marketing is only effective if your customers know about it. So part of your plan must include strategies for getting your deals in front of your customers.

Advertise discounts to bring customers to your locations through your website, social ads, direct mailers, and on-hold messaging

Then, promote discounts in your store to catch attention from shoppers who are already there. Feature your discounts on digital signage, menu boards, and overhead messaging. And, use in-store WiFi marketing to share deals with customers directly through their smartphones.

To learn more about how to use discount marketing to draw customers to your location and increase sales in your store, contact Spectrio today. We can help you develop a strategy to promote your deals to in-store customers, so they never miss your discounts and you never miss an opportunity to make additional sales.    

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