How to Use Coupons & Discounts without Sacrificing profits

Coupons and discounts are used by businesses because they attract customers and encourage them to buy from them instead of the competition. The problem is, using coupons and discounts frequently, or in the wrong way, will eventually eat into profit.

JC Penney used to run what seemed like permanent sales. Customers loved feeling like they got a good deal. But because the store was offering nonstop discounts and promotions, customers began to anticipate that. When the business altered its strategy and began offering selective discounts, customers revolted. The company remains far from fully recovering from the saga.

It is important to note that using coupons and discounts requires the use of a balance.

For a business owner As a store owner, you're looking to attract customers, but you don't want to sacrifice profits particularly over the long run.

Here are eight methods to use coupons and discounts without losing excessive profit.

1. Motivate a second purchase from customers you have not previously met.

If you think about the purpose of coupons for new customers, you realize that it's actually a lead generation instrument. The point of the coupon isn't just to generate one sale. The goal is to gain a client in order to sell to them again.

So how do you motivate a second purchase?

Another option is to offer customers a coupon for a second time after their purchase, as a reward for becoming an incoming customer. You can make this coupon smaller or require a greater purchase price to use the coupon, for example "spend $100 or more and save 20%."

Another method to encourage an additional 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 your products and services and how you can solve the problems they face, how you deliver joy, as well as any other advantages that you can offer. You can do all this without having to offer any discount at all. Keep them in 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 customer follow-up and nurture process.

2. Utilize tiered coupons in lieu of percents

In the previous tip we talked about the idea to offer a 20% discount when you spend $100 or over. Think about the advantages this kind of discount structure could provide you. What are the most common actions customers take? They'll pay more for the price reduction.

Similar approach to give tiered coupons, but not with percents. For example:

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

If you use this type of system you will notice that the amount the customer will receive is a single figure, even if they pay over the amount required.

A customer, for instance, who spends $50 receives $10 back, so you make the sum of $40. But if a customer spends 80 dollars, they still get their $10 back and you make 70 dollars. If their final cost exceeds the amount of $80, they could attempt to bring it above $100, so that they could get the money back in lieu of. In either case, you earn more money.

But with a flat per cent discount, the margins remain the same regardless of the quantity they spend. If you spend $100 and receive 20 percent off, that's an amount of $80. However, if they purchase $200, 20% off is now $40.

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

3. Use a loyalty program

While loyalty programs aren't necessarily ideal for every firm, they're an an excellent way to create lasting income. After all, some customers are awestruck by them and come returning to see their rewards grow!

This also gives you something to communicate with them by email in case they don't purchase anything for a few months, you can remind them how many points they've earned, as well as the things they could buy using points.

4. Make a membership or subscription

Discounts are a great way to increase sales in the event that you are able to convert them into regular income. If you can create a successful subscription model to your organization, just about any discount could be economically justified.

As an example, let's say that you offer a subscription of $19 per month as an option. If you are able to prove that your subscribers will be subscribed for at least six months, on average that's $114 in recurring revenue. Would you give a $25 off coupon if it meant someone joined your membership and earned an average of $114 revenues? What about the first month at 99 cents?

To motivate customers to join your subscription, you can offer giveaways, as well as larger discounts. This is because you'll get your money back and much more. The goal is to lure the customers' attention with a substantial reward, and then continue to provide value so they will stay loyal for a long time.

A different approach is to provide discounts on subscription itself. It could be that everyone who purchases more than $100 receives 20% off of their membership. It's still profitable thanks to potential recurring income.

5. Use product bundling discounts

If you bundle your products it is less about price and more in the ease you offer your consumers. Bundles are more fun when you bundle they well.

You could offer 20% discounts on an item bundle which gives your client and also generates higher returns for your company. Why? The average value of your orders is higher, and your packaging and shipping costs are lower than if you sold all those items separately.

6. Incentivize referrals

The power of word-of-mouth is immense. It's just not always enough but it's also not frequently as often as you would wish for.

If you have the most faithful customers, offer them another reason to inform them about your business to their acquaintances. Give them coupons they can pass out to their friends as well, and should their friends take advantage of them, they could also earn a reward.

This is smart couponing since it attracts a brand an additional customer who you might not have otherwise reached, and you turn your current customers into brand ambassadors.

Coupons can be sent like this via email, postal mail, or via text message. It is also possible to send links to a page on your website that has coupons to new customers, and request customers to forward it to their contacts.

7. Upsells on offer

It's also the best thing about it. doesn't feel like you're pressuring them, because you're offering exactly the same item they've previously purchased -- just more of it.

It is possible to offer additional types of upsells, for example, the possibility of selling your subscription. When you're making use of coupons and discounts, they provide an opportunity to recoup the lost profits on the very similar purchase. Also, if the product you're upselling relates in some way to the products consumers are currently purchasing and buying, it's an appropriate choice as well, and some may accept your offer.

8. Include a motive to sell your product

This brings us all the way back to our JC Penney story. They never had a reason to maintain their price. Thus, consumers came to expect and even demand these prices.

The way to avoid this is to conduct sales only when there is a reason to do so. You can get creative here. As long as you can justify your sale price the most loyal customers will agree with no expectation of to see it again in the near future.

Coupons and discounts used such a way increases loyalty , and also attracts new customers, but it doesn't box your customers in to future expectations for discounts.

Reasons for a sale are found almost everywhere:

• A local team celebrates that has won
• Thanking customers for X years in business
• A lot of inventory must be cleared
• Festive Season
• New customer discounts
• Planning to donate a portion of the sales proceeds to charities
• Profiting from an event in the news that you can relate to your company

Coupons and discounts that are smart boost long-term profits

Each of these strategies serves the same purpose that is to move the needle in the direction of attracting new customers, without making too big a profit or creating price-obsessed customers.

What you want are loyalty customers, regular buyers as well as recurring revenues. Utilizing coupons and discount offers in ways that produce any or all of those is usually a smart decision.

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