How to Use Coupons & Discounts, without sacrificing Profits

Companies use discounts and coupons to attract customers and make them want to purchase from them instead of the competition. However, making use of coupons and discounts frequently, or in the wrong way, will eventually reduce profits.

JC Penney used to run some sales that seemed to be permanent. People loved the feeling that they had a fantastic bargain. But because the store was offering nonstop discounts that customers came to expect it. When the business changed course and started offering exclusive discounts, the customers were furious. The company still hasn't fully recovered from the saga.

It is important to note that Coupons and discounts require a balance.

For a business owner As a store owner, you're looking to attract buyers, but you don't need to compromise profits particularly in the long run.

Here are eight ways to utilize coupons and discounts without losing the earnings.

1. Inspire a purchase from customers who are new to you.

If you think about the meaning of coupons to new customers, it becomes clear that it's actually a lead generation instrument. The purpose of the coupon isn't just to generate just one sale. It's about gaining a new customer and then sell to them again.

So how do you motivate to make a purchase again?

A good way to do this is by giving the customer a second coupon following their purchase, as a reward for becoming new customers. The coupon should be either of smaller or even require a larger amount of money to purchase it. For instance "spend $100 or more to get 20% off."

Another approach to motivate another purchase is to get customers to join by providing their email address to begin emailing or texting them. With email, you can inform the customer of the other services and products you offer, how you solve the problems they face, what you do to bring them joy and whatever other benefits that you can offer. This can all be accomplished with no discounts whatsoever. Be on the lookout for them, and they'll be more likely to buy again.

MailPoet provides the entire set of tools needed to design a welcome email sequence that will allow you to begin the process of nurturing and follow-up for your clients. process.

2. Use tiered coupons instead of percents

In the last tip we talked about the idea that offers 20% off on purchases of $100 or over. Think about the advantages such a discount plan might bring you. What will most customers do? They'll spend more to get discounts.

You can use a similar strategy to offer tied coupons but without any percents. Examples:

• Pay $40, and you'll earn $10 back
• You can spend $100 to get $20 in return
• You can spend $250 to get back $50

Using that type of structure be aware that the amount a customer will receive is a single figure, even if they are spending more than the minimum.

A customer, for instance, spending $50 gets $10 back and you earn the sum of $40. But if a customer spends $80 the customer will nevertheless get their $10 back making you 70 dollars. If their final cost ends up anywhere above the amount of $80, they could try to get it to more than $100 to be rewarded with a $20 refund instead. Whatever way you go, you will earn more money.

But with a flat per cent discount, the profit margins stay exactly the same no matter what sum they pay. If you spend $100 and then receive 20 percent off, that's an amount of $80. However, if they purchase $200, the 20% discount will now be $40.

Discounts for flat dollars plays to your advantage, because it increases average order size without increasing discounts in the same percentage.

3. Make use of a loyalty program

Although loyalty programs might not be ideal for every business, they can be great ways to generate long-term income. After all, some customers enjoy them, and they keep coming back to watch their rewards grow!

Also, this gives you something to communicate with them via email because if they don't buy any items for the next few months, it is possible to remind them how many points they've got, and the things they could buy using points.

4. Create a subscription or membership

Discounts work wonders when you transform them into ongoing income. If you're able to create a successful subscription model for your company almost any discount can be financially justifiable.

For example, suppose you have a $19/month subscription option. If you can demonstrate that your customers will stay subscribed for at minimum six months in total, this is $114 in recurring income. Would you consider offering a 25 percent discount coupon if someone joined your membership that generated the average of $114 revenue? Would you consider offering the first month at 99 cents?

To motivate customers to join your service, you may give away prizes and even bigger discounts. You'll earn the money back, and much more. The goal is to lure them over with a big reward, and then continue to offer value, so that they stay around indefinitely.

Another approach is to offer discounts on subscription itself. It could be that everyone who spends over $100 gets 20% off of their membership. This is still profitable due to the future recurring revenues.

5. Use product bundling discounts

If you bundle your products it is less about price and more on the convenience you're providing consumers. Bundles are more fun, especially if you package they well.

It is possible to offer 20% discounts on the bundle of products that provides your buyer and yet generates better profits for you. Why? Your order's average is higher and your shipping and packaging costs are lower than if you sold all those items separately.

6. Incentivize referrals

The power of word-of-mouth is immense. However, it's not always sufficient but it's also not in the way you'd like.

If you have the most loyal customers, provide them with the incentive to tell their friends about you. Offer them coupons to distribute to friends, and if their friends redeem them, the customer will also be rewarded.

It's smart to use coupons since it attracts a brand potential customer that you would not be able to reach otherwise, and you turn your current customers to brand ambassadors.

Coupons can be sent like this by email, snail mail, or text message. It is also possible to provide links to a landing page with coupons specifically for customers who are new and ask customers to forward it to their friends.

7. Upsells on offer

The best part is that it isn't like you're trying to pressure them, because you're offering exactly the same item they've already decided to buy but with a different version of it.

There are other options for upsells too, including the possibility of selling your subscription. If you're using coupons and discounts, upsells give you the opportunity to recover any profits lost on the exact same purchase. If the product you're upselling relates in some manner to what customers are already purchasing, it seems like an appropriate choice as well, and some may take you up on it.

8. Have a reason for the sale

This brings us back to the JC Penney story. They never had a reason for their permanent sale price. Therefore, the customers began to expect and even demand these prices.

A way to stay clear of this is to run sales only when there is a reason to do so. There are many ways to do this. So long as you justify the price you are charging and your best customers will take you up and not expect it in the future.

Utilizing coupons and discount codes by this method increases customer loyalty , and also attracts new customers however it does not tie you in with any longer-term plans for discounts.

Reasons for a sale are found almost everywhere:

• Celebrating a local sports team winning
• Thanks to customers for X years in business
• There is a lot of stuff you need to clear out
• The holidays
• New customer discount
• In the process of donating a part of profits to charity
• Taking advantage of an event in the news which you can connect to your own business

Coupons and discounts that are smart can boost revenue over time.

All these ideas serve all have the same aim that is to move the needle in the direction of attracting new customers, without making too big a profit or creating price-obsessed customers.

The things you need are loyalty customers, regular buyers as well as recurring revenues. Utilizing coupons and discount offers with the intention of generating any or all of those is usually a smart decision.

Please leave a comment in the comment section if you are able to suggest any additional ideas!