{"id":13773,"date":"2020-07-24T12:40:55","date_gmt":"2020-07-24T17:40:55","guid":{"rendered":"https:\/\/www.invespcro.com\/blog\/?p=13773"},"modified":"2020-07-24T12:40:55","modified_gmt":"2020-07-24T17:40:55","slug":"how-to-run-promotions-without-deep-discounts","status":"publish","type":"post","link":"https:\/\/www.invespcro.com\/blog\/how-to-run-promotions-without-deep-discounts\/","title":{"rendered":"How to Run Promotions Without Deep Discounts"},"content":{"rendered":"Reading Time: <\/span> 9<\/span> minutes<\/span><\/span>

Customers\u2019 love for a bargain is indisputable.\u00a0<\/span><\/p>\n

If I wasn\u2019t one of them, I would\u2019ve thought that maybe they are conditioned to only<\/strong> make a purchase when they think they are getting a great deal.\u00a0<\/span><\/p>\n

But being both a customer and a marketer has helped me understand both spheres.\u00a0<\/span><\/p>\n

I understand why customers like promotions, and I understand why marketers often roll out sales promos.\u00a0<\/span><\/p>\n

As a marketer, I have realized that the \u201c<\/span>customer is king<\/span><\/i>\u201d mantra has been engraved in our minds to the point that we even hurt our profits all in the name of pleasing the <\/span>king<\/span><\/i>.\u00a0<\/span><\/p>\n

Yes, offering deep discounts will drive more traffic and create a huge spike in sales in our online stores. <\/span><\/p>\n

But we have to think of the cost that comes with it.\u00a0<\/span><\/p>\n

This is not to say that deep discounting is not necessary at all, but my point is, <\/span>it should never become a default strategy for more sales unless you can actually afford it and have a robust marketing program to keep those buyers<\/b>.\u00a0<\/span><\/p>\n

Just as they\u2019re many ways to skin a cat, there is always a way to satisfy your prospect\u2019s expectations without destroying your profit margin. Deep discounts are not the <\/span>alpha and omega <\/span><\/i>of great deals, this article will show you a few ideas that are just as attractive to customers.\u00a0<\/span><\/p>\n

But, before we get into that, let\u2019s begin by looking at what you should do first.\u00a0\u00a0<\/span><\/p>\n

First things first: pay attention to your gross profit margin\u00a0<\/strong><\/h3>\n

More often than not, eCommerce marketers make the mistake of focusing on the amount generated from sales instead of looking at the bigger picture, which, in this case, is the <\/span>overall profits<\/b>. <\/span><\/p>\n

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Just because competitors are offering hefty discount promotions, it doesn\u2019t mean that you also have to follow the bandwagon.<\/span><\/p>\n

Smart marketers would first pay attention to their gross profit margins before activating any discounting strategies. To be more precise, you should start by taking a deeper look into the relationship between the selling price, margins, and volume of the product you want to discount.\u00a0\u00a0<\/span><\/p>\n

If there\u2019s a huge difference between your product cost and your selling price, then you can afford deep discounting your products. But if the difference is a slight one, I recommend you abort the idea and adopt the following tactics:\u00a0\u00a0<\/span><\/p>\n

1. Reduce the price if the customers purchase more products\u00a0<\/strong><\/h3>\n

I know cutting down prices is not a good feeling to have. But sometimes being generous to a customer who has spent above the given amount shouldn’t hurt that much \u2013it\u2019s just one of those things you have to do in order to make them come back again.<\/span><\/p>\n

Doing so also encourages customers to purchase more products (which means they spend more) than they perhaps need, especially when their intended order is not far behind the breakpoint.\u00a0<\/span><\/p>\n

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For instance, Adidas offers a 20% discount for ordering 2 or more pairs of sneakers. This is better than having a warehouse full of stock that is collecting dust or not selling.<\/span><\/p>\n

These types of discounts are referred to as<\/span> smart discounts<\/span><\/a>.\u00a0<\/span><\/p>\n

(We are actually creating an experiment for one of our clients \u2013 in the eCommerce space \u2013 where customers need to get to a certain average order value before becoming eligible for a discount.)<\/span><\/p>\n

If you think about it: this is also a clever way of encouraging customers to purchase those kinds of items that typically get sold once in a while. You\u2019re also more likely to meet your monthly quotas since you will be selling more products.\u00a0<\/span><\/p>\n

These kinds of deals are a win-win for both the customer and the seller. Customers will definitely think that they will make a steal if they buy in bulk. And Sellers, on the other hand, will be increasing the average order value for their businesses.\u00a0\u00a0<\/span><\/p>\n

2. Offer buy X, get Y promos\u00a0<\/strong><\/h3>\n

It\u2019s an open secret that customers like getting more items for less. And this is why most of them love BOGO \u2013 <\/span>buy-one-get-one-free<\/span><\/i> \u2013 promos.\u00a0<\/span><\/p>\n

Knowing that customers love BOGO, different brands use this promotion technique when they intend to motivate customers to write reviews: <\/span><\/p>\n

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Using the same tactic customers can also be motivated to share about company products on social media: <\/span><\/p>\n

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There are many variations of the BOGO concept \u2013it doesn\u2019t always have to be:<\/span> buy one get one free<\/span><\/i>. Sometimes the rule can be 3,4,5 and get one free. Or if you can\u2019t afford to give one free item, you can simply ask your customers to buy one and get one at a half-price:\u00a0<\/span><\/p>\n

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What makes the BOGO concept more effective is the perception it gives to customers. Whenever customers see BOGO deals, they perceive that they are getting a bargain.\u00a0<\/span><\/p>\n

Yes, it\u2019s a bargain but in reality, the retailer benefits more.\u00a0<\/span><\/p>\n

Take for instance, if you ask customers to first buy a product with a 75% margin in order to get a free product that has a 15% margin, will that count as a dramatic loss to you?\u00a0<\/span><\/p>\n

Alternatively, let\u2019s say you have a surplus of t-shirts that cost you $20 each and you intend to sell each at $100 (but they never <\/span>actually<\/span><\/i> sell at this price). If you sell them for $50 you make a $30 profit ($50 \u2013 $20). So if you\u2019re to use the BOGO tactic here, you can offload two t-shirts faster instead of one:<\/span><\/p>\n

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However, small eCommerce businesses or shops with smaller margins can take a dramatic hit from BOGO deals if they offer them in a similar manner as top retailers.\u00a0<\/span><\/p>\n

If the BOGO deal still sounds like a deep discount to you \u2013 then approach it this way:\u00a0<\/span><\/p>\n