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Using Coupons & Discounts Without Sacrificing Profitability

Coupons and discounts are a great way to increase customer loyalty and attract new customers.  The majority of consumers are looking for good deals on their purchases, and approximately 93% of shoppers use at least one coupon code or discount every year.  While it is important to offer these discounts, it is equally as crucial to use them effectively to avoid negatively affecting your profit.  Check out aiCommerce’s do’s and don'ts  for utilizing coupons and discounts without reducing your profitability.

1. DO Use Coupons & Discounts to  Reward New Customers

Coupons and discounts can encourage consumers who are “on the fence” to complete their purchase and buy from your company.  Approximately 60% of shoppers are willing to try a new product when provided with a coupon, making it a great way to introduce your brand to new potential customers.  Offering this initial discount helps build trust from the consumer and encourages repeat purchases in the future.  By developing this trust early, the consumer is more likely to build a loyalty to your brand and hopefully encourage others to purchase from your brand too.

2. DON'T Use Blanket Coupons & Discounts All the Time

While utilizing coupons and discounts can help your brand, they can also be harmful.  For this reason, it is important to avoid using blanket coupons and discounts.  If you are constantly providing shoppers with coupons and discounts, they will come to expect price reductions rather than be grateful for them. 

3. DO Use Coupons & Discounts to Help Offload Excess Inventory

As demand shifts, it is not uncommon to see inventory piling up.  If you have excess inventory that just won’t seem to sell, offering a coupon or discount could help get the product moving.  While it may not be the price you wanted to sell it at, the cost of holding onto the inventory will be reduced, offsetting the price decrease.  This should only be used if you have really high amounts of excess inventory, otherwise your profitability will be negatively affected.

4. DON’T Forget to Keep Firm Redemption Requirements 

Make the requirement of using your coupon or discount very clear to the buyer.  If there is a minimum spend threshold they have to meet, or specific categories of products, or any other specifications tied to the coupon or discount, the buyer needs to be aware.  In the same vein, make sure your coupons and discounts have set schedules and expiration dates.  This will provide more incentive for the buyer to purchase because a sense of urgency will be created with the limited amount of time offered.  If there is no time limit, the buyer could wait on completing the purchase or forget to make the purchase altogether.  

5. DO Use Targeted Campaigns to Provide Coupons & Discounts to the Right People

digital coupon users

Targeting your coupons and discounts to a specific market can help make them more effective.  As shown in the graph to the right, the amount of people in the United States using digital coupons has grown significantly over the last several years, and targeting your coupons and discounts to specific target markets and audiences can help build your brand.  Additionally, you can analyze traffic data and past purchasing behavior to determine if a coupon or discount might encourage a shopper to complete a purchase.  While the price of an individual order might be lower, if you can increase the total number of sales the difference can be offset. 

 


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