This is a guest post by Sean Godier from business-supply.com.
You see it in a lot of places: 20%, 30%, 40%–even half off. It seems like many online retailers have gotten crazy with the discounting. Black Friday and Cyber Monday have become Everyday Tuesday and Regular Wednesday. And with it comes the pressure for you to compete.
But it doesn’t have to be that way. You don’t need to sell the farm to routinely convert customers.
How do I know this? Because I recently ran a Spring Metrics Smart Offer which was my most successful one to date—in both conversion percentage and in revenue. The offer? 2% off. That’s right, TWO PERCENT. The offer generated 3.4x revenue and a 62% higher conversion rate than we typically see with other offers. It absolutely crushed a previous offer of 5% off, and the 2% offer was presented during our slowest month of the year.
So why the success with a measly 2 percent?
High Perceived Value. There comes a point where you devalue your product, not only in your eyes, but in the eyes of the consumer. If you’re selling a high quality product and offering huge discounts, the customer is going to think one of two things: 1, you jacked up the original retail price so you could offer a larger-than-normal reduction; 2, your product isn’t as good as advertised.
Customers Are Regular People Too. Everyone loves a deal. But most consumers aren’t unreasonable. They know you need to make a profit to keep your business alive. Sure, there is always a small segment of consumers (think serial comparison shopping engine folks) who won’t touch your items until it’s at or near clearance prices. But do you really want that consumer? That person is loyal to no one but the discount, and more often than not, is more high maintenance than your average customer.
Extra Toppings. To many customers, a Smart Offer—even at 2%–is like getting a cherry on top of your ice cream for free. It’s a gift, and they’re going to take it. And they’re going to appreciate it too. A customer coming to your store had no expectation of an additional gift, so 2% off is, well, awesome.
Always remember that typical customers want three things:
- They want to buy—but not be sold
- They want to feel like they got a quality product at a good price
- They want to enjoy the experience
Do those three things, and you don’t have to sell the farm with discounts.