To Discount or Not to Discount?

That is the Question.

We’re all familiar with the £10 off, 20% off and BOGOF discounts to capture the attention of new customers, get some quick income or clear an old product line. There's a variety of discounts you can play with.

Offering discounts is a great tool to have in your marketing kit, but it’s not always your best option. 

What's the Difference Between Discounts and Promotions?

It's all semantics really, but a discount is a form of promotion, promotions include other activities which drive sales like PR and promotional events.

Which is better for your company depends on the type of business that you're running. On the one hand, a luxury brand with products at £3000+ has the AOV (average order value) to support a promotional event or some expensive PR activity. High price tag brands are less likely to see a boost in sales from a small discount on products. If people are willing to spend huge sums on one product they are less swayed by small discounts and more interested in brand authority, trustworthiness and customer service. Quality indicators make it easier to justify a large purchase. 

If you sell smaller goods, especially FMCG (Fast Moving Consumer Goods) then it's much easier to convince a lead to convert into a customer with a discount on the products. These purchases are often more price point driven than investment products. A discount can help them to choose you over the competition.

The winning solution, however, is to use a combination of the two. A FMCG will still benefit from some PR activity, framing your products USP (Unique Selling Point) as quality, local, vegan, reliable, wholesome or however you have constructed your brand. Discounts on luxury products often work best to convert immediate sales at your promotional events - for example 'Today Only! Get Free Delivery'.

Types of Discount

Now we've got a bit of an idea of what your brand should be doing and when, we thought it would be handy to run through various types of discounts you could try. I'm sure you'll have already toyed with a few, so here's some top tips about each one.

Percentage Discounts

This is what springs to mind when you think discounts, it's the most common and the most popular for many brands.

• 10% is often ignored, consider 20% for a shorter timeframe
• Make sure you're tracking sales comparing year-on-year to check for seasonality
• Choose between storewide for general sales boost or discounts on a specific product type you're trying to promote

Money Off

This is tricky if your item price varies wildly, but depending on the ££ amount it can be more attention grabbing in your advertising.

• Do you need to add a minimum order price to qualify?
• Ensure this cannot be used by the same person multiple times to avoid 3 orders from John Smith getting 3 discounts
• Often works for higher price point items where £10 off £100 feels more than 10% off and the ££ value feels more tangible

BOGOF

Buy one get one free is more of a supermarket promotion these days, but if you have stock to move then this can work for you

• Does the cost price allow for this kind of promotion whilst still making some profit? Or would you use this as a loss leader and the total comes below a free delivery minimum order amount, so you're making money on postage or the other items purchased?
• You can try buy one get one half price, this is less successful than free but can help move stock which wouldn't be profitable on BOGOF

Multibuy

This really only works with commodities like food and clothing, as you don't often need two fridges.  

• The products work best if they are related and it makes sense to purchase in multiples, you often see this with t-shirts
• Don't overcomplicate it, Buy One Get X Off Another is already a lot, so it needs to be across a whole range and keep exclusions to a minimum

Added Value

Sometimes phrased as 'gifts' with every purchase, or with brand specific purchases.

• Make it very clear on the homepage, category page and item pages of products which qualify for a free gift, to try to help convert sales
• This is not a great sales converter, but a little added value can push people who were already thinking about it.
• Often popular with cosmetics, you can give away a small amount of something that you're hoping they will return to purchase once they've tried it. The value to you may be in the repeat business.

Free delivery

Saving the best until last, no one wants to pay for delivery these days. 

• Many online retailers consider free delivery part of the price of doing business, others include postage costs into product prices - especially on high cost items
• Free delivery over a certain threshold is popular with lower price point items, this often pushes customers to increase their AOV (Average Order Value) 
• Free delivery and returns is a great selling point for items like clothing which is difficult to choose online, it adds confidence in the brand as it infers your belief that customers will retain their purchases
• Your postage costs will be lower as a business than they would be to the customer - so the perceived value is higher than the actual cost to you

Are You Lost?

If you still can't separate your discounts from your promotions or don't know your social from your elbow then we can help. We work with a variety of businesses to curate offers, discounts and promotional activity for them. We know what we're doing. 

Your business is one of a kind, even your competitors activity might not be best suited for your business - although it's a very good place to start when looking for inspiration. If you have any questions or just need a push in the right direction then give us a call. 

Helping you helps us, so it's in our interest to make sure your promotion makes you money - if it's a bad idea we'll just tell you. 

We will also ensure there is data from your promotional activity, ensuring you have information moving forward on what worked when and how well. We really can't stress this enough, chopping prices and giving things away without any data is like driving blindfolded. We do not recommend it. 

We're here if you need advice, help or just someone to do it all for you, just get in touch with the Sonder team. 

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