While discounts and promotions really can bring in new business, you can make a loss and so one of the first things you want to do is have a plan to offset costs as far as possible.
Here are 3 tips for you.
Tiered Loyalty Programs
Really, setting up tiered loyalty programs is how you can encourage customers to spend more by unlocking increasing benefits in a way that not only offsets discount costs but also ultimately means stronger long-term customer relationships.
So first, you want to have clear spending thresholds for each tier so that for example, Silver, Gold, and Platinum tiers could be based on cumulative spending over a set period. Then, get people into it by offering escalating benefits – like increased discounts, exclusive access, or personalized services – as they move up the tiers.
Of course, you want to keep customers informed about their progress and potential rewards so that they know to spend more to reach the next tier.
Say you’re a fashion retailer. A good idea could be a tiered loyalty program where Silver members get a 10% discount on their next purchase, Gold members enjoy 15%, and Platinum members receive 20%. This way, as you get them to spend and move up tiers, the increased discount becomes an attractive incentive, ultimately offsetting costs with higher overall sales.
Flash Sales with Urgency
Creating a sense of urgency is a popular marketing tactic across multiple forms for a reason.
In particular, flash sales often prompt people to make quicker purchasing decisions and chances are this leads to a surge in sales that offsets the impact of discounts.
First, you want to keep flash sales short, preferably a few hours or a day, to maximize the urgency factor. It’s also a good idea to utilize many different channels – email newsletters, social media, website banners, etc – to really get people to hear about your flash sales. Be sure to clearly spell out the discounted prices and emphasize the limited-time nature of the offer here.
For example, say you run a bookkeeping business, consider a 24-hour flash sale offering a 7% discount on all services. The urgency likely means more new business during the short promotional period.
Introducing exclusive memberships is one of the best ways to create a sense of belonging – a not ineffective way to hook in more business. Plus, the upfront membership fee should contribute to the cost of discounts and the like.
So, you want to introduce different membership tiers with varying levels of benefits so that you can charge a recurring fee for membership for a steady stream of revenue.
Suppose you’re an online streaming service. Why not introduce a premium membership tier with a monthly subscription fee where premium members enjoy ad-free streaming, exclusive access to new releases, and a 20% discount on related merchandise?
There’s no reason why you should be in the red because of discounts and promotions. Try out these tips!