There's no debating the effectiveness of discounts when it comes to both customer acquisition and customer retention.
A well-executed discount campaign is a sure-fire way to spark interest among your target audience and beyond. The idea of saving money is always attractive – even to less motivated consumers.
However, there are better and worse ways to establish different types of discount campaigns, and some practices can hurt more than help.
For example, suppose you run too many discount campaigns on a repeated basis. In that case, you risk weakening the integrity of your product's original retail price, thereby damaging your brand reputation.
So, while a good discount campaign is an absolutely invaluable tool for drumming up additional demand on a short-term basis, it is also vital that you follow a few smart principles and best practices to get the most out of them.
In this article, we list our top 5 less traditional discount campaign practices that will help guarantee the success of the campaign and the long-term success of your business.
#1 First-time Customer Discounts
Offering a discount exclusively to first-time customers is a tried-and-true method to encouraging a sale from a person who's never used your store before.
It can be performed digitally by placing a cookie in visitor's browsers that identifies them as a new guest. A coupon code worth somewhere around 5 and 15% off their first purchase can then be offered solely to these visitors.
To offer the discount in a physical location, you could run a campaign wherein customers who sign up to a mailing list can redeem a code in the store that's local to them.
Customers who redeem the offer will associate exchanging with your business with good value and be encouraged to come again. If they are satisfied with the product or service, they are likely to use you again, even when no additional discount is applied.
Offering first-time buyers discounts is a simple way to achieve that all-important first purchase. The best part is that it can help establish loyalty without a severe impact on your new customers' lifetime value.
#2 Cashback Discounts
If you know anything about us at OMG, you know that we LOVE cashback programs and think they're one of the single most powerful ways to grow your customer base and increase revenue.
A cashback discount scheme is a program established by a company where customers can receive simple discounts as they spend. They are automatically paid back to customers immediately after purchase. They can be used at your store or others if you partner with a cashback platform.
Partnering with a platform like Quidco or TopCashback is a good way to increase the pool of potential customers. However, it should be noted that they take a commission of each purchase.
A cheaper way would be to utilise a company like ours to create your very own cashback campaign. Not only do we have an already established network of discount-hungry customers, but we also have a number of free digital tools to help you determine the best way to calibrate your cashback campaign.
A good cashback campaign is sure to motivate customers to use your store only, giving you a valuable competitive edge over stores that don't utilise these schemes.
#3 Referral Discounts
Given their popularity in the digital app space, you've probably participated in or at least observed a referral discount scheme before.
A new user of a store or community is assigned a personal referral code in such a scheme. When used, this code can be applied to redeem a discount with the store.
For example, Uber uses a referral system where your first ride can be eligible for a monetary discount (say, £5 off) if you have the code assigned to your friend and given to you.
The best part? You can then give your own personal code to an unlimited amount of your friends. Each time a code is redeemed, you are given a further discount for essentially creating a new member.
It is a genius way to rapidly expand your network of users, as new signups are made more attractive by the possibility of a discount that only your personal associate can offer you. It also encourages you as a user to create as many other new users as possible, as it will lead to a direct cost-saving benefit.
If you're business maintains network or community-based customer pools, don't ignore the referral discount scheme's power!
#4 Loyal Customer Discounts
Loyalty programs are a marketing strategy that encourages customers to continue exchanging with a business by offering tiered, personalised financial incentives, or rewards.
Tesco's Clubcard scheme is a great example. It is a membership-based system where recipients can earn 'points' every time they spend at Tesco, which can be converted into vouchers to use in-store.
You sacrifice slightly in profit margins when the discount vouchers are applied, and you quickly gain in repeated custom. Customers will want to continue doing business with you, as the more they do, the more they save in the long-run.
This type of discount is extremely powerful in times of economic hardship like we see right now. People are more motivated than ever to find sources of cost-savings.
More so, loyalty schemes can create a pool of highly valuable customer data that will serve to help you as a manager in making decisions about your future products and price points.
#5 Promotional Events
The final potential discount campaign practice you should consider is a discount-led promotional event.
This is where a business arranges a real-life or perhaps digital 'event' where existing and potential customers can assemble to experience some activity hosted by the store, receiving a discount on products or services resulting from their attendance. This, of course, has to be organised responsibly and safely.
The activity could be as simple as drinks and/or snacks, a video presentation, or interaction with the store's latest product release. For example, gaming electronics company PlayStation could host an event where visitors can play the new PS5 console, while at the same time receiving an exclusive discount on the console or related games and accessories.
Promotional events are excellent tools for generating buzz for new product releases. The press will often be invited along, and guests are likely to share clips and experiences from the event on social media. The discount itself will encourage high sales figures for the new product while boosting word-of-mouth marketing about the product and brand.
Whilst real-life events may be difficult to safely organise in the current climate considering COVID-19, digital 'events' are safe alternatives. For example, an online pet store could offer discounts on dog-related products for visitors to the site on International Dog Day.
Joining the OMG network could be the most powerful practice of all…
We hope by now you have some strong ideas for your next discount campaign.
To ensure that your campaigns are executed flawlessly, you should consider joining our network, where we match discount-motivated customers with intelligent merchants interested in creating new customers with lifetime loyalty.
We have a full suite of tools to help merchants. You can create and manage discount campaigns and loyalty schemes seamlessly, and help customers discover amazing offers including cashback schemes and loyalty rewards.
In fact, you can have access to an easy "all in one place" implementation of the above five practices with OMG Portal. You don't even need any additional hardware.
Learn more about OMG solutions by joining our network at partners.omg.one. Oh, and it's totally free to join.