Running discounts can be a great way of stimulating cash flow for your retailer. However, there’s always the worry that discounts will come at the cost of hurting your sales and damaging your business. Below, we explore how you can continue discounts while keeping sales balanced.
Why?
But why are discounts useful in the first place? For a start, they can help attract new customers or re-engage lost customers – a bargain might be all it takes to reel them in. On top of this, it can help you shift old stock and boost your cash flow. Plus, if you offer discounts to certain groups of people – an NHS volunteer discount, for instance – it can boost the reputation of your business.
How?
Identify Objectives
Discounts should be part of a coherent strategy to boost the company. If you’re putting up discounts without much thought, they can easily be negative. Instead, you should work out the purpose of your discount. Are you trying to attract new customers, or are you trying to clear space for new stock? Each situation requires a slightly different approach to make it work.
Timing
The timing of your discounts is key. Ideally, you want to place it in a moment where customers are especially likely to try shopping with you. If you have the data, you can through the days each month when business increases and capitalize by carefully placing your discounts in these moments.
Margins
It’s crucial to carefully check the margins when you’re running discounts too. You don’t want to end up giving away too much stock or find yourself losing money on each sale. Calculate all the costs involved in putting one product on the shelf and ensure that you don’t sell for less than this.
Conditional Promotions
Different types of discounts can yield different results. Conditional promotions, for instance, can help protect your margins. This is where you set a benchmark a customer has to meet to access your discount. One example is where you stipulate that a customer has to spend a certain amount to get a percentage discount.
Reward Loyal Customers
Rewarding consistent customers can help you retain them in the long term. Try offering a club scheme: this could be where customers who sign up to your store will receive exclusive discounts.
Special Offers for New Visitors
Discounts can also boost your sales by attracting new customers. Try introducing special offers for new visitors and you’ll find yourself with an expanded pool of consumers.
Discounts don’t have to hurt your sales. By putting thought and effort into your discounts, you can ensure that they boost your business in the present and in the long term.
