If you are considering implementing discounts as a pricing strategy, there are usually three main causes why you are even thinking about this.
- The price of your product is in decline. This reason is clearly a compulsory factor for a discount. When the price on the market is dropping due to the strategies of your competition or for any other reason for that matter, the purchasing power needs to be altered.
- Raising product awareness. Especially if you are concentrated on the inbound marketing techniques, this step is a much needed one when the market becomes overcrowded with similar offers. By lowering your prices for a certain amount of time, you are drawing attention and recreating the interest in your product or service.
- Getting rid of old stock. A pretty much self-explanatory reason. When those products begin to pile up, sometimes you just have to cut your losses and get the best out of the situation. Having a discount is a well advised strategy in this situation as well.
In all of the above mentioned cases, a discount as a strategy will prove to be an effective technique only when executed correctly and diligently. Putting up a sign for a discount is rarely a novelty these days, so if you are in a situation where you simply have to conduct and execute a strategy of this sort, here are a total of three verified ways in which your discount strategy will be flawless.
Discount Strategy #1: A Special Event
If you have the time to wait for a special occasion of any sort, know that your customers are probably waiting for them as well. This is a very effective strategy simply because people are well accustomed to looking for discounts at Christmas, Easter, and every other holiday for that matter.
In 2010, during the Black Friday, a total of 212.000.000 shoppers stormed the stores, both off and online. In 2013, e-commerce sales increased by a total of 32% during the Thanksgiving holidays, and this trend continues to rise each year.
It is evident why companies worldwide wait for this specific date to announce their discounts. But if you believe that this is all in the spirit of the holidays, think again – it is nothing more than a clever marketing strategy.
From electronics stores to kitchen appliances, companies execute discount pricing strategies very diligently, not missing even the Memorial Day to offer a special deal for some of their products.
Discount Strategy #2: Your Premium Customers
Segmenting customers is a very important factor for maintaining a successful business. When you are thinking about customers’ relations management, know that by implementing categorization of your customers you are gaining an automatized level of communication and a structured method which will help you in the offer distribution department. This also includes discounts.
By keeping a record of your customers, and through a relationship which you should care for and build with continuous communication, you are able to get not just brand advocates, but also build a base of regular clients. And with this discount strategy you will not just sell your products, but maintain a relationship with you customers, making them feel special and appreciated in the process.
This is one of the standard tactics for driving revenue. Most companies employ these, and similar tactics, from the very beginning of the customer’s journey. For example, Dodo case, a company which manufactures all sorts of cases for iPads, wallets, and similar products, offers a discount in exchange for an email address.
With this “special offer,” a company is able to build a relationship with a customer instantaneously. If they keep giving discounts to those customers, they are able to build a steady stream of revenue, and each and every discount will already have a group of prospects that will love to hear about special offers from their favorite brand.
Discount Strategy #3: The Secret Discount
This strategy is very similar to the aforementioned “Premium Customers” strategy. The difference between the previous pricing strategy, and this one, is in one little element that we all cherish and fall for frequently – a pitch that is usually refer to as “the inside tip.”
If you are looking to make extra profit while your product is still selling for its regular price, you will certainly have no problem in finding your “most trusted” customers, or even retail shops, that will appreciate to get this product for a discount. The trick is – you are making them believe that they are the only one that are actually getting this discount.
The best way to execute this strategy is to have a potential partner that can actually sell your product to their customers, and gain profit from your discount. While we can’t present examples for this particular strategy, for obvious reasons, you should know that this is also a standard practice in the retail business.
But be careful when you are executing this strategy. A potential information leak may cost you more than you’ve bargained for. So offer a discount discretely, let the potential partner know what the regular price of the merchandise is, and how much you appreciate their business. By doing so, you are gaining a partner, and a possible channel for your future sales as well.
Discount strategies work. In fact, more than 93% of the US consumers use a coupon or a discount throughout the year. So there is an evident need for them! All that you need to do is to push it in the right moment, to the right customer.
Read more: Neutral Is Not A Strategy