Discounts

There are several overall types of discounts and offers you have at your disposal. Let’s take a look at the most common: Percentage Based Discount - The most popular way to offer discounts is percentage based discounts. This can include small incentive percentages like 5% or 10% off, larger discount to really drive sales like 20% and 25% or large percentages like 50%+ to liquidate merchandise that isn’t moving or old. You can also easily apply these discounts to multiple collections, products, and locations in Shopify. Dollar Value Discount - Offers that are based on a dollar value can be positioned as a credit. This makes people feel like they're wasting money if they don’t use it. In some studies, redemption of dollar based offers vs. percentage based offers can be as much as 175% greater. Pair one of these with a minimum purchase to increase its impact. An easy trick to keep in mind when deciding between a percentage or fixed amount discount for a specific product is the rule of 100. If your item is less than $100.00, use a percentage discount, if higher, use a fixed amount discount. This is a psychological trigger that will result in the highest perceived value for your customers. Free Shipping - Shipping costs are often cited as the number one reason for shopping cart abandonment. Offering free shipping is a great way to mitigate this and increase conversions. Use Free Shipping discounts in conjunction with a minimum purchase requirement to increase your average order value. You can also limit this discount type to specific countries and groups of customers, and avoid cutting into your margins by excluding shipping rates over a certain amount. Free Gift - A free gift with a purchase can be a great way to provide additional value to customer. If used strategically, it can also be used to increase average order size and/or to get rid of product that isn’t moving.

As mentioned previously, online store offers can be an effective tool for not only customer acquisition, but also for customer loyalty, however, it’s important to consider your overall brand strategy before you begin offering discounts.

If you want to position yourself as a higher end brand or if you have slimmer margins, you may want to consider sticking to customer loyalty type offers as oppose to weekly sales. On the other hand, if you have healthy margins deep discounting and daily/weekly sales might be better for hitting your goals. 

Ultimately, you need to consider if offers and the type of offer is the right strategy for your brand. Regardless, building an online business will generally involve a lot of experimentation to understand what works best. The best approach is to choose a goal for every campaign and offer, start small and measure the results.

Before we jump into some different ways you can effectively use offers to help increase customer loyalty and acquisition, let's first look at some of the pros and cons of utilizing offers for your online store:

Pros

• Easy and quick to implement natively in Shopify or using apps.
• Easy to track with our new Discounts Report.
• Increased customer acquisition.
• Increased conversions.
• Increased customer loyalty.

Cons

• Decreased margins and profitability.
• Possible brand damage.
• Decreased conversions outside of sale periods if you train visitors to wait for offers.
• Tendency to drive non-loyal (price driven) shoppers.
• Tendency to reduce average order size. 

Offers, coupons, discounts and deals. There will come a time when most online merchants will be faced with the decision of whether to offer discounts, when to offer discounts and how much should the discounts be worth.

Offering discounts for your online store can be a powerful weapon in your conversion arsenal, however, used haphazardly, and you can do significant damage to your brand or worse, become unprofitable.

In this post, we'll review some of the pros and cons of offering deals for your online store, look at some of the most popular ways you can use discounts to drive conversions and, of course, how to most effectively use them.

Let’s dive in.

Note: For the purpose of this blog post and keeping things simple, we'll refer to coupons, discount and deals all as offers.