What can you do to make use of coupons and Discounts Without Sacrificing profits

Companies use discounts and coupons to attract customers and motivate them to shop with their company instead of competing. However, making use of coupons and discounts frequently, or in a manner that is not properly executed, could permanently eat into profits.

JC Penney used to run the appearance of a permanent sale. The customers loved knowing that they got a good bargain. But because the store had a regular schedule of discounts and promotions, customers began to anticipate it. Therefore, when the store altered its strategy and began offering limited discounts, shoppers reacted. The business isn't yet fully recovered from the saga.

All that to say: using coupons and discounts requires an amount of money.

As a store owner, you want to attract customers, but you don't wish to lose money, especially over the long-term.

Here are eight methods to make use of coupons and discount without sacrificing the profits.

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

In the event that you reconsider the meaning of coupons to new customers, you realize that it's a lead generation instrument. The goal of a coupon isn't making just one sale. It's about gaining a new customer so you can sell to them again.

So how do you motivate another purchase?

A good way to do this is by giving them a second coupon after they have made a purchase as a reward for becoming a new customer. You can make this coupon smaller or require a greater purchase price to use it. For instance "spend at least $100 and save 20%."

Another way to motivate a second purchase is to get your customer to sign up to your mailing list to begin emailing and messaging them. With email, you can educate the new customer about the other services and products you offer and how you can solve the problems they face, how you deliver joy, and whatever other benefits that you can offer. This can all be accomplished with no discounts whatsoever. Stay on their mind and they'll be more likely to buy again.

MailPoet gives you the necessary tools to create a welcome email series that allows you to start the customer follow-up and nurture process.

2. Tiered coupons are better than percentages

In the last tip we covered the method to offer discounts of 20% on purchases of $100 or over. Consider the benefits the discount scheme might bring you. What do most people think about? They'll pay more for the price reduction.

Similar method to provide tied coupons but not with percents. For example:

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

Using that type of structure you will notice that the sum the client will receive is a single number, even though they spend way over the amount required.

In this case, a person who spends $50 receives $10 back which means you get 40 dollars. However, if the customer purchases 80 dollars then they still get $10 back, making you the sum of $70. If their final cost exceeds the amount of $80, they could attempt to bring it above $100, so that they could receive the $20 back instead. Either way, you make more cash.

But with a flat per cent discount, the margins are the same regardless of the amount they spend. If you pay $100, and get 20 percent off, that's an amount of $80. If they buy $200, 20% off will now be $40.

Flat dollar discounts works better for you, because it increases average order size without increasing discounts by the same proportion.

3. Use a loyalty program

Although loyalty programs might not be ideal for every business, they can be an excellent way to create lasting income. After all, some customers are awestruck by them and come back to watch their rewards grow!

Also, this gives you something to follow up with them by email since if they do not buy anything for a few months, you can remind them how many points they have, and what they are able to buy with points.

4. Create a subscription or membership

Discounts work wonders when you transform them into ongoing revenue. If you can create a successful subscription model for your company and you can get a discount that is reasonable, almost every discount is financially justified.

For example, suppose there's a monthly subscription for $19 option. If you are able to prove that your customers will stay subscribed for at least six months, on average that's $114 in recurring revenue. Would you offer a $25 discount coupon, if someone joined your membership with the average of $114 revenues? Would you consider offering the first month that costs only 99 cents?

To motivate customers to join your membership, you could offer giveaways, as well as larger discounts, because you'll make the money back, and much more. It's the idea of winning the customers' attention with a substantial reward, and then continue to offer value, so that they'll be loyal to your service for years.

Another option is to give a discount on the subscription itself. You could say that anyone who makes a purchase of more than $100 will receive 20% off their subscription. The savings are still worth it due to the future recurring revenues.

5. Use product bundling discounts

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

You could offer 20% off a product bundle that gives your client and also generates higher profit for your business. Why? Your order's average is higher, and the cost of packaging and shipping are lower than if you were to sell each item separately.

6. Incentivize referrals

Word of mouth is powerful. It's just not always enough, and it doesn't happen frequently as often as you would like.

For your most faithful customers, offer them another reason to inform them about your business to their acquaintances. Give them coupons they can distribute to friends If their buddies take advantage of them, they will also be rewarded.

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

Coupons can be sent like these via snail mail or text messages. It is also possible to send links to a page on your website with coupons specifically for new customers and ask customers to forward it to their friends.

7. Upsells on offer

The best part is that it doesn't feel like you're pressuring the customer, as you're offering exactly the same item they've previously purchased and just a little more of it.

It is possible to offer additional types of upsells, for example, upselling your subscription service. If you're offering coupons or discounts, upsells give you an opportunity to recoup the lost profits on the exact identical purchase. And if the item you're upselling relates in some way to products that the customer is already buying, it seems like an appropriate choice to accept your offer.

8. Include a motive for your sale

This brings us right back JC Penney story. They didn't have a rationale for their permanent sale price. Thus, consumers came to anticipate and sometimes even demanded these prices.

A way to stay clear of the problem is to only run sales only when there is the need to. There are many ways to do this. If you are able to justify your sale price and your best clients will be willing to take you up on it without expecting it in the future.

Using coupons and discounts in this manner increases loyalty and attracts new customers However, it doesn't tie customers into any longer-term plans for discounts.

Reasons for a sale can be found anywhere:

• Celebrating a local sports team winning
• Thanking customers for X years in business
• There is a lot of stuff you need to clear out
• Festive Season
• Discounts for new customers
• Planned to donate a percentage of the sales proceeds to charities
• Taking advantage of a story in the news which you can connect to your own business

Smart discounts and coupons boost long-term profits

All these ideas serve the same purpose that is to move the needle in the direction of attracting new customers without offering too much money or creating price-obsessed customers.

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

Make sure to leave a message in the comments section if are able to suggest any additional ideas!