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Successfully Increase E-commerce Store Revenue With Customer Discounts

Jaques Cilliers - Writer for BeProfit
By Jaques Cilliers
Kelly Hendrickse - Editor for BeProfit
Edited by Kelly Hendrickse

Updated April 25, 2023.

Boost revenue and profits with personalized discounts.

Did you know that 92% of US shoppers search for promotions or coupons before shopping online? It can be a powerful way to improve retention. Businesses can leverage this in numerous ways, such as product-specific discounts, free shipping, or rewards. With the right strategies, you can boost customer satisfaction and improve revenue and profits.

How Can Discounts Improve Revenue?

Discounts can help increase sales by reassuring customers that they are saving and products are within their budget.

Abandoned Cart Discounts

Baymard research shows that 48% of customers abandon their carts because of high additional costs, like shipping and taxes. Offering a free shipping discount can help recover abandoned carts and improve your revenue and profit by increasing conversion rates and average order value (AOV).

For example, a business that offers free shipping on orders over $50 can encourage customers to add items to their cart to meet the free shipping threshold, as well as complete their purchases.

Seasonal Discounts

These are offered at certain times of the year, such as holidays. Seasonal discounts can be powerful tools to help businesses increase profit margins and sales by attracting new customers, boosting sales, and clearing out seasonal inventory.

For example, a clothing retailer offering 40% off all winter jackets in February boosts sales and clears inventory by the end of the season, while also attracting customers looking for winter clothing sales.

Businesses can leverage their customers' shopping habits and seasonal festivities for higher AOVs and profits.

» Stuck on marketing? Learn how to increase your marketing ROI with dynamic pricing

Referral or Subscription Discounts

This strategy encourages customers to make repeat purchases or refer new customers to your business, which can lead to increased sales and profits. With 48% of customers saying that exclusive offers would make them purchase items sooner, businesses can utilize personalized and targeted discounts to help convert them.

For example, a meal delivery service that offers discounts based on past purchases to customers who refer a friend can help drive repeat purchases from existing customers while also gaining new customers.

Minimum Spend Discounts

This discount is awarded when a customer meets a certain minimum spend threshold. This type of discount encourages customers to add items to their cart and increase their AOV to receive discounts.

For example, a cosmetics retailer that offers a $10 discount on orders over $50 can encourage customers to purchase more products to meet the minimum spend threshold.

This strategy helps businesses increase sales and profits by increasing AOV. Similarly, discounts for higher quantities are also an option, where customers can enjoy price cuts if they buy in bulk.

Returning Customer Discounts

These discounts can form part of loyalty programs and usually offer percentages or flat rate discounts. The purpose of these is to encourage repeat purchases, increase customer loyalty, and ultimately boost sales and profits.

For example, an online bookstore that offers a 10% discount to customers who have already made a purchase may encourage those customers to come back and buy more, which can increase retention and lower acquisition costs.

This can be done by suggesting similar products of interest or cross-selling products. Highlighting a discount this way can help encourage large purchases since customers can feel you understand their interests and that they're getting higher value for money.

For example, a technology retailer offering discounts on related items bought together, like a laptop, mouse, and laptop bag, can encourage customers to make multiple purchases at once, increasing total order value and revenue.

Take Action With Real-Time Insights

BeProfit offers an intuitive platform to help you monitor your sales data, profits, and revenue metrics.

  • Uses auto-matching and manual tagging to track revenue metrics and cost per order.
  • Provides an aggregated view of business performance by connecting all shops.
  • Accessible on mobile and desktop devices for easy collaboration with teammates.

BeProfit: Profit Analysis Dashboard

4.8/5(320 reviews)

Some Tips For An Effective Discount Strategy

Research shows how effective discount strategies can also improve retention and loyalty, stating that 39% of customers are more likely to return for repeat purchases after using discounts. However, ineffective discounting can imply poor value and lead to lower profits and higher cart abandonment rates. Some tips include:

  • Ensure profitability - Too many or too frequent discounts can reduce profit margins and revenue, so limiting promotional discounts to certain periods or items is suggested.
  • Monitor the market - This can ensure that businesses' rebate strategies remain competitive and relevant. For example, a retailer offering 20% discount during a big sales event when a direct competitor is offering 30% may not be effective.
  • Make sure discounts aren't too frequent - If discounts are frequent, customers will expect them all the time, which can lead to lower perceived value and even cause customer loss when discounts aren't available. Ultimately, this can hamper revenue and profits.
  • Choose discount types strategically - Discount types should match businesses' overall goals and customer preferences. For example, if a business wants to increase AOV, minimum order discounts may be a good option. Discounts for repeat customers can be useful if a business wants to optimize retention.

» Find out how to track revenue like the e-commerce giants with trade secrets

Boost Revenue With Strategic Discounts

By choosing discount types carefully, businesses can encourage customers to purchase more and encourage repeat purchases. This can not only help lower customer acquisition costs but also improve revenues and profitability. And choosing these strategies comes down to efficient performance monitoring. Tools like BeProfit help businesses with an all-in-one dashboard to track profits and monitor real-time sales data. This way, your discount strategies can be data-driven for improved results.

BeProfit: Profit Analysis Dashboard

4.8/5(320 reviews)