Entrepreneurs have different attitudes to discounts and promotions. Some emphasize the big profits that the business receives while others are sure that discounts devalue the product along with the whole brand. For example, the founder of Clean Browsing, hates such marketing campaigns, while they may be beneficial to the company. He told that if cost reduction is the only way for your company to sell a product, then your prices were initially too high.
Some entrepreneurs told that due to stocks, already affordable products become cheap so the company loses profit while others think that with the right marketing policies, it can support the business.
Many large corporations with a stable income actively use discounts. According to the software products developer Scott Bolinger, some customers would never have purchased a particular product without a discount. Entrepreneur notes that in long-run sales do not affect the brand value for consumers, but at the same time they can bring profit. Based on perennial experience, five strategies for the successful use of discounts are distinguished.
1. Distribute Discounts Throughout the Year
The regular major promotional campaigns allow you to accumulate a list of doubting customers and contact them directly at the right time. The discount will allow them to make a purchase right now when they are ready for it, without delaying it.
Moreover, it is not necessary to make promotions exactly every three months. It is better to focus on less profitable seasons. For example, if your company experiences a decline in sales in the summer, then the promotion can be launched in early June and late August. You can also offer customers a good price within the “Black Friday”, “Cyber Monday”, as well as on holidays.
2. Use Advertising
Promotions will not work if no one knows about them. For this reason, brands need to remind customers about themselves. It is recommended to inform customers about one sale two to four times. You can send one notification at its start, two within the promo, and one closer to the end. In addition, at the last stage, you can use incentive phrases such as “last chance”, “catch up” or “only today”. Information about the sale should constantly attract the attention of the customer.
Design and schedule social media releases and track the frequency of posts so that the client does not treat it as spam. Each post should lead subscribers to your site.
3. Carry out Small Promotions
Large-scale promotions must be held no more than four times a year. This forces some customers to wait for discounts for several months. This time can be filled with small sales, each of which will be directed to a specific segment of customers. You can organize a webinar, and then offer a discount only to its participants. Refer to the least active subscribers or those who doubt the appropriateness of the purchase with a favorable offer.
In addition, the main product can be promoted through a better price for a related product or service. If you sell split systems, you can offer their installation with a good discount or completely free, but in a limited period of time. Such promotions are a great opportunity to try something more creative than a regular discount.
4. Use Discounts on One Product to Sell Others
Some businessmen believe that the discount depreciates the main product. Smart entrepreneurs know that even if they lose money on their first sale, they can make a profit on subsequent sales.
For financial calculations, brand owners use the Lifetime Value (LTV). This is the total profit the company received from one client for the entire time of cooperation. Simply, this is the lifetime value of the customer. The ability to calculate LTV allows you to determine how much the company can lose on the first sale, but at the same time earn in the long term.
Also in the economy, exist the term loss leader loss leader. This is a pricing strategy in which a certain product is sold at a price below its market value in order to stimulate the sale of other, more profitable goods and services. Supermarkets offer cheap milk and eggs to attract buyers. Despite the fact that they lose in these categories, other positions bring supermarkets a profit that compensates for the loss.
If you sell a lot of goods, you can use one of them as a “loss leader”. Some companies do this in order to attract customers, introduce with their brand and try to retain in order to obtain good income. A good cash flow management during this tactic implementation will allow you to estimate all its benefits.
5. Do Not Offer a Discount Because of Laziness
You should not offer a discount if you are desperate to find customers in another way or are too lazy to work with them. Some companies send out emails with discount coupons, which you can use after registering on the brand website.
According to the leading entrepreneurs, such a tactic means failure in advance. The newsletter does not give an idea of the product value, registration can keep the client only for the duration of the campaign, and the mass distribution of discounts looks like a gesture of despair.
In this way, the company can get newly registered users, but this will give a short-term effect. Brands should take care of building their image and establishing long-term relationships with customers. First of all, it is necessary to attract the target audience with a high-quality market offer. It affects customers more than a discount coupon.