Discount Marketing: The Must-Read Guide in 2020 (PROs and CONs)
Let’s face it.
Your business could have obtained 10X results by now if you only knew what to do and how to do it. There’s no limit when it comes to growth and no strict rules when it comes to improvising ideas.
The problem is that most marketers and entrepreneurs forget that marketing is very similar to real life. As you keep getting sucked into the status quo, dancing between the standards established by the average results around, you’ll never reach the top of your industry.
Because you’re failing to use underrated strategies like discount marketing to skyrocket your business. Of course, I’m not saying that you should all do it – but have you at least considered it?
In case you’ve never tried discount marketing, you’re probably seeking useful and valuable information that can help you get started. Honestly, that is why I’m writing this post.
By the end of this article, you’ll acknowledge and understand the golden basics of discount marketing, the PROs, the CONs, and the guidelines that you should keep in mind while giving it a shot.
What’s Discount Marketing?
Discount marketing is a conventional strategy that companies use to stimulate sales, to compete with other brands, and to create a bit of buzz around their products and services to develop momentum.
To put it in simple terms, lowering the price of different products and deals can immediately help you capture the attention of your prospects. If you’re doing it right, you’ll improve the volume of sales, and I’m sure that’s one of the reasons why you’re here right now.
The best performance marketing agencies in the world perceive discount marketing as the “secret weapon” that smart businesses can leverage to generate better results. Noticed the word “smart”?
Why is it considered so?
On the other hand, as you’ll see later in this post, discount marketing is not a surefire way to improve your business performance. It can backfire, and it can hurt you badly.
When Should You Use Discounting Strategies?
To discount or not to discount? That is the real question.
While price strategies work wonders when used properly, there’s a really fine and thin line between performing a profitable discount strategy and hurt your brand’s reputation with general and unnecessary discounts.
Every business is unique; therefore, it requires a unique discount marketing approach.
Before everything else – you need to ensure that you have a very precise objective that is linked to a discount strategy that you want to use.
Generally, businesses create discounts when they’re launching a new line of products, when the competitors are getting ahead, but also during “dead” times when people are spending their money in other places. A few more reasons could be:
- To attract your customers with discounted seasonal sales
- To promote and showcase your product at a specific event
- To advertise your products and services via influencer marketing strategies
- To encourage emotional purchases
- To encourage large orders
- To create a buzz around different products
- To generate email leads
- To reward loyal customers
Of course, big retails are always using offering discounts and coupons. It’s part of their overall strategy. However, as a smaller business, you need to plan everything thoroughly and test every single result that you can to minimize the risk of damaging your brand’s image.
To be quite honest…
You’re the only one who can decide if coupons and discounts can help your business right now. As you follow the next guidelines, you’ll be able to decide if starting a discounting strategy is the right move now or in the nearest future.
How NOT to Use Coupons?
Before you create the first coupon and the first discount marketing strategy, let’s explore the biggest mistakes that businesses commit when executing discount marketing campaigns.
1. Poor Design (for brick and mortar stores)
The aesthetic appeal of your coupons is the first impression that your brand leaves. Therefore, whenever you’re thinking about choosing the cheapest graphic design service, consider it twice and make a wiser decision. Every penny that you invest in those small pieces of paper are going to matter, so make sure you perceive it as an investment rather than a cost.
2. Complicated and Confusing Proposals
Simple, short, and concise. Remember it: simple, short, concise. If you break this rule, your coupons will generate way fewer results than you’ll expect. Whenever you have to include additional details to make the offer understandable, use the bottom space to do it.
Nevertheless, avoid confusing your prospects and customers. That’s what they hate the most. One good idea would be to study the most successful coupons in your market and find a good twist to align them with your target audience’s needs.
3. Deals that Nobody Needs
A blog that publishes blog posts because “those are the SEO rules” is doomed to fail. Why? Because the strategy and the writers who perform the strategy aren’t concerned about the value they bring to their customers.
It works the same as discount marketing. To make it worthwhile, you need to ensure that your coupons are truly worth your customer’s attention. This way you’re not wasting your time, money, attention, and energy on developing and managing a discount marketing campaign that simply brings no results.
4. General Targeting (Lack of Personalization)
Personalization is the key. First of all, you need to align your coupons and discounts with your brand’s reputation and image. Use the same colours that you use in your logo, use words that resonate with your audience, and make sure you add as many layers of personalization as you can to show them that the coupons were created especially for them.
5. Using the Same Coupons for Different Marketing Channels
If you want to use both digital coupons and physical coupons, you’ll have to mark a few differences. To be effective, you should personalize your coupons according to the marketing channel that you’re using.
For example, coupons that are distributed on the street should be very different from the coupons that you send to your seasoned buyers through email marketing.
Discount Marketing Checklist
There are a few rules of thumb that you should always keep in mind while performing discount marketing strategies:
Always Go Targeted
Geo-targeting, interests targeting, behaviour targeting – you should cover everything. Target one objective, one audience, one deal, and one unique value proposition. Keep it simple and you’ll see that “less is more” is not just a theory.
Pay Close Attention to Margins
If you’re offering discounts, you need to ensure that you know exactly how much profit you’ll be getting after each sale and whether the entire discounting strategy will bring you closer to your goals. To keep your profits high, cut the marketing expenses as much as you can, segment the offers, and offer upsells.
Always Know Your Customer Acquisition Cost
The average customer acquisition costs change over time. Nevertheless, whenever you decide to run a discount campaign, make sure that the coupons that you use aren’t exceeding the customer acquisition expenses by a lot. Ideally, you should focus on converting your one-time customers to repeating customers (higher lifetime value and lesser cost).
Use Different Types of Coupons for Different Purposes
Always be flexible and never be lazy. Don’t use a coupon that you’ve used last year only because you don’t have to design it again. Whenever you have a new objective in your mind, ensure that the coupon truly reflects the objective of the campaign and the target audience that you’re going for.
Make Sure Your Offer is Limited
Coupons and discounts work very well when they’re making people feel that they’re missing out on something. This is one of the biggest perks of discount marketing, and you should fully leverage it. When your coupon is exclusive and your offer is limited, the prospect will be very tempted to take advantage of the opportunity before other people do, thus he will often purchase based on an emotional trigger.
Create Content Around Your Deals
If you create a new deal, make sure that you develop a content marketing campaign around it. For example, if you’re selling red dresses at a discount, create a few articles or videos that will expose these red dresses to your audience. Tempt them first, show them the bait, and then simply wait. Obviously, you need to promote your content using the same key principles – targeted and personalized.
Test, Measure, and Optimize All the Time
Test, test, test, then test again. You should always control the performance of your discount marketing campaigns. Each coupon that’s being used produces significant effects in your overall business strategy. That is why you should use various analytics tools to figure out how to dramatically improve your conversions over time.
Use What Has Worked Before Until It Stops Working
Don’t reinvent the wheel. If you’ve figured out a coupon strategy that works, use it again and again until it stops working. Diversify if you want, but never waste the working strategies while replacing them with fresh ideas that haven’t been proved.
Five Disadvantages of Coupons
As I’ve mentioned, coupons can bring significant disadvantages to your business in case of misuse. To prevent the CONs of discount marketing, take the previous checklist into close consideration and follow every principle there.
Here are the five most common disadvantages of coupons:
- Coupons are costly. Think about it – every coupon that you use is money that doesn’t go in your pocket. Even more, you have to invest in the entire campaign, which presumes designing, printing, and marketing costs.
- Coupons can cannibalize your profits. Interesting metaphor, right? Your products may be bought even if coupons didn’t exist by the same customers. Therefore, you may be losing money. To avoid this trouble, limit the promotions to one-time customers or exclusive buyers.
- Price discounts may damage your brand’s perceived value. Most customers associate low-cost products with a lack of quality. That is why there’s a thin line between profits and losses. Make sure that you’re preserving your brand’s reputation and be careful with any significant price drop.
- You may get your audience too used to deals. Some customers will stop buying products until you post a new discount, coupon, or opportunity that they can leverage. You never want that to happen!
- You may attract the wrong target audience. People that are looking for “good deals” are all over the place and right around the corner. It can set a bad precedent for the future because these customers aren’t really appreciating your business and they’re just looking to profit on their own.
Discount marketing is a fine art that we can all learn from. Every successful business is already doing it and that’s a good enough justification to state that it works.
How will it work in your case? That’s totally up to you. Learn, study, research, and make sure you’ve got the necessary key information before you start.
It may bring you revenues, or it may cut revenues. As long as you’re willing to test, measure, and optimize every campaign that you perform, you’ll eventually get the hang of it and start profiting consistently!
About the author: Leon Collier is a passionate blogger, digital marketer, and manager at Dissertation-today.com. He’s currently focused on improving the performance of small local businesses who are eager to invest in non-conventional marketing strategies. Aside from work he likes reading and playing tabletop games. Follow him on twitter @LeonCollier12.