In an ideal world, everyone loves discounts: they give businesses the opportunity to sell more and customers the opportunity to buy cheaper.

But in reality, even with such a simple tool, it may not be all that smooth: too big or too small a percentage can scare away customers. And discounts that are too generous can also have a negative impact on business profits.

In the new article on my Affiliate Programs blog we tell you how to give attractive discounts for customers and still stay in the plus.

THE DOWNSIDE OF DISCOUNTS

Have you ever wondered why Apple almost never gives discounts on its products?

The reason is that the brand values its loyal audience. The same iPhone is perceived by customers as a premium product: by purchasing it, they seem to declare their socio-economic status. That is why many people are ready to take the iPhone even on credit – in this context it becomes not just a smartphone, but a symbol of some success.

And now imagine that someone else buys the symbol of your success at a 20% discount. Offensive? Offensive!

That’s why discounts are rare in the premium segment: they exist, but usually in a very limited format. For example, for this purpose they create special closed clubs – the format of a loyalty program, and in these clubs they can give discounts to a certain segment. But, as a rule, even they are not big.

IN LUXURY BRANDS

Many luxury brands destroy their goods instead of having a “grand sale”. Luxury brands are subjected to a huge barrage of criticism because of this decision: from eco-activists and not only.

But they do not change their approach, because it is actually more profitable for them: otherwise they will scare away all their loyal audience. Millions of dollars are literally burned instead of being realized – why?

There is an opinion that luxury exists only because there are people who are willing to pay for it. There is such a phenomenon – the Veblen effect. It shows that an increase in the price of certain categories of goods can paradoxically lead to an increase in demand for them.

How it works: a conditional bag for $500 is too expensive to be in mass demand, and too cheap to become an object that everyone wants to own. Increase the price by 10 or, better, 20 times and you get a bag that all the fashionistas of the world are ready to hunt for.

Add to this the impossibility to buy it without prior consultation and we have a portrait of the most desirable Hermes Birkin bag in the world, which is ready to be queued up for.

Yes, the situation is paradoxical – not every brand could pull off such a trick as Hermes. Both the reputation and the history of the company are important here. But the fact remains that if Hermes at some point decided to sell their “birkins” with a discount of even 3% – the whole affiliate marketing concept would be ruined. Most likely, this bag would not only lose the status of the most popular in the world, but it would be devalued altogether.

Does that mean it’s better not to discount at all? Unless you’re Hermes, of course not. Rather, the experience of luxury brands simply shows us that too much discounting can, on the contrary, scare customers away.

Exactly the same as too frequent – if you constantly have “flying discounts”, the value of the product is gradually eroded. Why buy it at full price when it’s actually worth half of that?

BIG SALES

Too frequent sales like to “sin” educational platforms. You may have noticed that online courses almost always give very large discounts to their users: in honor of Black Friday, Christmas and so on.

The same discounts they give out to everyone they buy advertising integrations from. And as a result, in the eyes of potential clients, the cost of courses is always equal to the discounted price, and the real price seems overpriced.

Small discounts, too, often cause dissatisfaction of buyers and act as a subject of public discussion – especially on Black Friday. And this is logical: while in the United States on the main day of sales people queue up from nightfall to buy goods at a 50% discount, some Russian stores offer discounts of 5% – and even on the most unclaimed goods.

Does this motivate users to buy more? Of course not. Neither does it increase the average customer’s check.

Instead of a small discount, it is better to offer a more specific and tangible benefit to the customer – for example, free shipping or a gift with purchase. The cost of the bonus may be equivalent to the same 5%, but the user will see more benefit in free shipping than in a $5 discount for a $200 purchase.

Discounts don’t work for everyone universally. If a company has no budget, it is better to refuse them altogether than to “grind out” 5%, which will not attract a client anyway. If there is a budget, you should not constantly motivate customers with discounts. There is a risk that they will get used to it and stop perceiving you without them.

In order to use this tool correctly, it is important to know your product, audience characteristics and to calculate your budget so that you don’t lose money.

WHAT DISCOUNTS ARE AVAILABLE

1. Discount for prepayment.

This type of discount is often used by bloggers: they announce their product and offer to pre-order it at a discount.

Why this seems attractive to the buyer: in this case, he feels the exclusivity of the offer. When the product comes out the discount will no longer be available, so it’s important for him to “have time” to benefit. And this time limitation creates the necessary tension, which activates the customer’s fear of missing out on this benefit.

2. Personalized discount.

Personalization is almost a must-have tool. Users expect you to communicate with them individually – this applies to content, marketing offers, and discounts, among other things.

For example, the game – “Wheel of Fortune”, which is often found on sites can also be attributed to personalized discounts, as the bonus to each user falls out different. The discount can also vary depending on purchases: the more the user buys, the higher the percentage.

It is important that the user has a feeling that it is he who influences the discount – either he increases it due to specific actions, or just gets “by luck”.

Another option is personalized discounts that depend on purchase history.

You track what the user most often browses and buys specific categories of goods. Accordingly, you can lower the price for the customer just for them, emphasizing in your offer that you give a discount on those products that the customer likes. In this case, the user will, again, feel a personalized approach.

3. Non-standard discounts.

Discounts can also be approached with a share of creativity. You can, for example, offer discounts to every thousandth customer or organize a sale in honor of something unusual. It all depends solely on your imagination and the context that surrounds the brand.

4. Activity discounts.

Discounts can also be part of some competitive mechanics: for example, you can give 10-20% coupons to those who are active on your social networks or leave reviews.

How you incentivize this activity is not so important. The key idea here is that the user feels that he or she “earns” this discount by certain actions.

That is, again, in any scenario, you need to think through what will make the user feel the exclusivity of the offer.

MAKING A DISCOUNT WITHOUT HARM

Before diving deep into the discount mechanics, you should determine what business goals you want to achieve with their help in your affiliate campaign.

The goals can be very different.

• Increase the number of orders.
• Increase the average check.
• Increase the sale of a certain category of goods – for example, seasonal.
• “Wake up” a particular segment of customers.
• Align prices relative to competitors.

Once you define your goals, it will become clearer which strategy is best to follow.

If you want to increase the average check – try to make an increasing discount depending on the amount of purchase: from 2 000₽ – 10%, from 4 000₽ – 15% and so on.

For an overall order increase, large-scale sales on many product categories at once and with a wide variation of discounts, or free shipping as a nice bonus, work well.

For all purposes, it is important to inform customers about your promotions: on their own they will work, but much worse. 

Maximize your users’ attention to the benefit of your offer: if it is not obvious, no discounts will work.

Сообщение Customer Discounts: how to Make them Effective? появились сначала на AFFILIATE PROGRAMS.