8 Advantages of Discounts You Can Profit From
It is a common misconception that giving away discounts will plummet your profits, but that is not true. Giving away discounts is a great way to grow your business. You might be surprised to learn that 91% of American shoppers use coupons while shopping online, which translates to 262.4 million shoppers. That’s right, nearly everyone loves a good deal, and you can use this consumer behavior to your advantage. Use discounts to lure your customers back! In this article, we’ll get into the advantages of discounts and how you can profit from them. Let’s get started!
Key Statistics on Discounts
Before we learn about the specific advantages, let’s look at some eye-opening statistics that demonstrate the power of discounts and coupons.
- 45% of U.S. consumers would shop online more if more coupons were available, including 67% of those aged 26 to 40 and only 25% of those over 57.
- 80% of consumers feel encouraged to make a first-time purchase with a brand if they find an offer or discount.
- Consumers are twice as likely to purchase a product with a 20% discount than at the regular price.
These numbers paint a clear picture that discounts aren’t just nice to have; they’re a crucial tool for growing your business.
8 Best Advantages of Discounts
1. Attract New Customers
One of the most significant advantages of offering discounts is their ability to attract new customers. A well-placed discount or promotional offer can encourage otherwise reluctant potential customers to make a first purchase. The new consumers who have made the purchase successfully are likely to rebuy the product, making them loyal consumers of the product and brand. Here’s how you can make it work for your business:
Practical Tips:
- Offer a compelling first-time purchase discount (e.g., 20% off).
- Promote your discount on social media platforms where your target audience spends time.
- Use GrabOn to list your discount, reaching a wider audience of deal-seekers.
Pro Tip: Create urgency by making your new customer discount a limited-time offer. For example, “20% off your first purchase when you sign up for our newsletter – offer valid for 48 hours only!”
2. Boost Sales Volume
Discounts can increase your sales volume by encouraging customers to make purchases they might have otherwise postponed. While discounts may cut down the product’s price, they also act as an incentive to buy more. Here is how you can boost sales by using discounts:
Actionable Strategies:
- Implement a tiered discount system (e.g., 10% off on $50, 15% off on $100, 20% off on $150).
- Use flash sales to create a sense of urgency.
- Offer bundle discounts to increase the average order value.
- Introduce a BOGO (buy one get one) sale so customers get more for their money.
3. Clear Inventory
Discounts are an excellent tool for clearing out slow-moving inventory, freeing up space and capital for new products. Clearance sales not only help with stock management but also reduce product waste. Here is how you can do it for your brand.
Practical Tips:
- Create a dedicated “clearance” section on your website.
- Use email marketing to promote your inventory clearance to your subscriber list.
- Offer deeper discounts on items that have been in stock the longest.
Case study: Kohl’s executed its clearance sales with remarkable efficiency by focusing on customer convenience and strategic pricing. They organized their sale into easy-to-navigate sections like Home, Women, Men, Kids, and Shoes, making it simple for shoppers to find exactly what they needed. With over 3,000 items up for grabs and discounts as high as 85%, including an additional 50% off already reduced prices during their standout October 2022 sale, Kohl's created a shopping experience that was both exciting and accessible.
4. Improve Cash Flow
Cash flow is a necessity for any business and organization. Discounts can benefit cash flow because they encourage customers to purchase goods and services. Companies can offer discounts during periods when sales revenues are low or during an economic recession.
Actionable Strategies:
- Offer a small discount for early payment on invoices (for B2B businesses).
- Use seasonal discounts to boost sales during slower periods.
- Put up products on discount that have been in the inventory for a long time.
5. Build Customer Loyalty
Discounts can be a powerful tool for building customer loyalty and encouraging repeat purchases. 75% of consumers say they favor companies that offer rewards programs. Businesses can use loyalty programs as a method of earning customer loyalty so that customers keep coming back for more.
Actionable Strategies:
- Implement a loyalty program with point-based discounts.
- Send personalized discounts to customers on their birthdays or anniversaries.
- Offer exclusive discounts to your email subscribers.
6. Enhance Brand Awareness
Discounts may help improve brand awareness if planned smartly. Every time a brand comes up with a sale or any offer, it comes up on various channels, social media, blogs, newsletters, and so on. For example, Instagram users collectively spend 17.6 million hours daily viewing Reels, so if you share a reel about your brand's sale, it is bound to reach a large audience. It will not only reach new customers but also act as a reminder for previous customers, which will only increase your brand awareness.
Practical Tips:
- Partner with influencers to promote your discounts to followers.
- Use referral discounts to encourage word-of-mouth marketing.
- Create shareable discount codes for social media.
Success Story: When Dropbox implemented a referral program offering free storage space, it led to 3900% growth.
7. Gain Competitive Advantage
In a competitive market, discounts can help you stand out from the crowd. Offering discounts at the right time can help with capturing a segment of the market share that would go to other companies. By charging a relatively low price, companies can influence customers to go for their products.
Practical Tips:
- Monitor your competitors’ pricing and offer strategic discounts to undercut them.
- Create unique discount structures that set you apart (e.g., mystery discounts, gamified discounts).
- Partner with GrabOn to ensure your discounts are visible to deal-seeking customers.
8. Gather Customer Data
Coupon promotions across various channels offer businesses valuable insights into their customers, including email addresses, purchasing behaviors, and preferences. Companies can use this information to market relevant products and services, tailor their marketing strategies, and improve customer service. The good thing is that 83% of consumers are willing to share their data to enable a personalized experience.
Actionable Strategies:
- Offer a discount in exchange for completing a customer survey.
- Use unique discount codes to track the performance of different marketing channels.
- Analyze the purchasing patterns of customers.
Advantages of Discounts for Customers
As a customer, discounts are more than just a way to save money; they transform your entire shopping experience. Discounts help reduce the prices of items you love, allowing you to stretch your budget further and afford products that might otherwise be out of reach. In fact, studies show that online shoppers who use coupons spend an average of 24% more than those who don't, highlighting how discounts encourage customers to shop more and explore additional items.
Beyond saving money, discounts create a sense of excitement and satisfaction. Whether it's a flash sale or a seasonal promotion, these offers make shopping more engaging by adding an element of urgency and exclusivity. It also makes buyers shop impulsively when there is a sale. Discounts also enable you to try new products or brands without breaking the bank. Ultimately, discounts not only make shopping affordable but also enjoyable and rewarding.
Disadvantages of Discounting
While discounts offer numerous advantages, it’s important to be aware of potential drawbacks:
Reduced Profit Margins
While discounts can drive sales volume, they can also significantly cut into your profit margins if not strategically implemented. If you frequently offer steep discounts without considering your costs, you might find it challenging to maintain profitability.
Potential Devaluation
Relying too heavily on discounts can lead to a perception that your products or services are of lower quality. If customers come to associate your brand with constant sales, they may question the true value of what you offer.
Making Full-Price Sales More Challenging
Customers may come to expect discounts, making full-price sales more challenging. When you regularly provide discounts, your customers may start to anticipate these offers as the norm. This expectation can make it challenging to sell products at full price, as shoppers might hold off on purchases until the next sale.
To mitigate these risks, always have a clear strategy behind your discounts so you can monitor their impact on your business performance.
Conclusion
Discounts are a powerful tool in your business arsenal, capable of attracting new customers, boosting sales, enhancing brand awareness, and building customer loyalty. By implementing the strategies outlined in this guide and leveraging platforms like GrabOn to promote your offers, you can use discounts to your advantage. You never know; your next sales boost could be a discount away.
