Tips for Using Coupons and Discounts Without Sacrificing profits

Businesses use coupons and discounts because they attract customers and encourage them to buy from them instead of the competition. However, applying coupons or discounts too often, or in a manner that is not properly executed, could permanently eat into profit.

JC Penney used to run some sales that seemed to be permanent. Customers loved feeling like they got a good bargain. Since the retailer was offering nonstop discounts and promotions, customers began to anticipate that. When the business switched its tactics and offered limited discounts, shoppers reacted. The company still hasn't fully recovered from the saga.

It is important to note that couponing and discounts need a balance.

As a store owner As a store owner, you're looking to attract clients, however you do not need to compromise profits particularly in the long run.

Here are eight methods to make use of coupons and discount without losing excessive profit.

1. Inspire a purchase from customers you have not previously met.

When you rethink the meaning of coupons to new customers, it becomes clear that it's an effective lead-generation instrument. The goal of a coupon isn't just to generate one sale. It's about gaining a new customer and then continue to sell them.

So how do you motivate a second purchase?

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

Another way to motivate a second purchase is to encourage your customer to sign up with their contact information, and start emailing or sending them texts. Through email, you are able to inform the customer of the other services and products you offer and how you can solve their problems, what you do to bring them joy or any other benefit you offer. This can all be accomplished without any discounts at all. Stay on their mind as they're more likely to return to the store.

MailPoet gives you 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 percentages

In the previous tip, we discussed the strategy of offering 20% off on purchases of $100 or over. Consider the benefits this kind of discount structure might bring you. What are the most common actions customers take? They'll pay more for the price reduction.

It is possible to use the same approach to give tied coupons but not with percentages. Examples:

• Spend $40 and receive $10 in return
• Spend $100 and receive $20 in return
• You can spend $250 to get back $50

If you use this type of system be aware that the amount the customer receives is a fixed number, even though they pay higher than what is required.

A customer, for instance, paying $50 will receive $10, so you make $40. But if a customer spends around $80 the customer will nevertheless get their $10 back making you 70 dollars. If their final cost is higher than $80, they may try to get it to above $100, so that they could receive the $20 back instead. In either case, you earn more money.

But with a flat percent discount your margins are identical regardless of the amount they spend. If you pay $100, and then receive 20 discount, it's an amount of $80. But if they spend $200, the 20% discount now becomes $40.

Discounts for flat dollars can work better for you since it will increase the an average size order without raising discounts by the same rate.

3. Make use of a loyalty program

Although loyalty programs might not be ideal for every business, they can be effective in creating long-term revenue. For one thing, some customers love them and keep coming returning to see their rewards grow!

This also gives you something to follow up with them over email, because if they don't buy something for a couple of months, you could remind them how many points they've earned, as well as what they can buy with the points.

4. Create a subscription or membership

Discounts can be extremely effective in the event that you are able to turn them into recurring revenue. If you're able build a successful subscription system for your company almost any discount is financially justified.

As an example, let's say you have a $19/month subscription option. If you could prove the customers who subscribe to your service will remain for at minimum six months, on average you'll earn $114 in recurring revenues. Would you give a $25 discount coupon if you had a new member and earned the average of $114 revenues? Would you consider offering the first month that costs only 99 cents?

To motivate customers to join your service, you may do giveaways and much larger discounts. You'll earn your money back and more. The goal is to lure the customers' attention with a substantial reward, and then continue by offering value to ensure they will stay loyal for a long time.

A different approach is to provide discounts on membership. For instance, anyone who makes a purchase of more than $100 will receive 20% off of their membership. This is still profitable for you because of the future recurring revenues.

5. Use product bundling discounts

If you bundle your products they are less competitive in price and more by the convenience that you provide your clients. Bundles are more fun, especially if you package they well.

Offer 20% off a product bundle that gives an excellent deal to the client and also generates higher profit for your business. Why? Your order's average is higher, and your packaging and shipping costs are lower than if you offered each of those items individually.

6. Incentivize referrals

Word of mouth is powerful. It's just not always enough to be effective, and it's not happening as often as you might like.

To reward your loyal customers, give them an extra reason to tell them about your business to their acquaintances. Offer them coupons to distribute to friends, and if their friends use them to redeem coupons, your customer will also be rewarded.

It's smart to use coupons as it can bring in a new customer you wouldn't normally have reached. Additionally, it turns your existing customers to brand ambassadors.

Coupons can be sent like these via snail mail, or via text messages. Also, you can send links to a landing page with coupons specifically for customers who are new and ask customers to forward it to friends.

7. Make upsells available

Best of all, it does not feel as if you're threatening the customer, as you're offering the same product they had already made a decision to purchase but with a different version of it.

There are other options for options for upselling, such as the possibility of selling your subscription. If you're offering coupons or discounts, they provide a way to make back those profits that you lost from the same purchase. And if the item you're upselling relates in some manner to what consumers are currently purchasing and buying, it's a natural decision for them to be willing to take it up.

8. Give a rationale to sell your product

It brings us all the way back to our JC Penney story. There was no reason for their regular sale price. So, customers came to expect , and often demand their prices.

One way to prevent this is to conduct sales when you have the need to. It is possible to be creative with this. So long as you justify the price you are charging and your best clients will be willing to take you up with no expectation of to see it again in the near future.

Utilizing coupons and discount codes in this manner increases the loyalty of customers and draws new ones however it does not tie your customers in to future expectations for discounts.

Reasons for a sale can be found just about anywhere:

• Celebrating a local sports team taking home a trophy
• Thanks to customers for X years in business
• A lot of inventory needs to be cleared
• Festive Season
• New customer discount
• In the process of donating a part of profits to charity
• Utilizing an article in the media that you can relate to your business

Discounts that work and coupons that make sense can boost revenue over time.

All these ideas serve to achieve the same goal -- to thread 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 regular customers, loyal customers as well as recurring revenues. Using coupons and discounts in ways that produce either or all of them can be a good idea.

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