8 Unique Discount Strategies You Should Try

Discounts are a powerful way to increase sales and for some customers, it can be a deal-breaker. This is why it is important that you test different discounting strategies to see which one works better for your audience.

But before you start offering discounts, you should first figure out your goal of why you’re offering discounts to your customers. Your goal(s) could be to:

• Acquire new customers
• Bring back customers who dropped out without completing their purchase (cart abandonment)
• Increase repeat sales
• Capitalize on the increase in shopping behavior of customers around an event
• Get rid of old inventory

Once you’ve defined your goal(s), you should test out the following discount strategies to see what works the best for your business:

1. Simple percentage discount or fixed cash discount: These are the most prevalent discount strategies where you offer a fixed x% discount or a fixed $Y discount on a purchase. In this case, you can choose to put a condition of minimum order value to increase your average order value. Or you can impose other conditions like offering it only to your first-time customers.

2. Volume discount: Instead of offering a discount on each unit of your product, you can offer a discount when customers buy multiple units of a product. This increases the sales volume of your product while reducing the unit cost. For example, buy 3 packs and get a 10% discount.

3. Bundled discount: Very similar to the volume discount but instead of offering discounts on multiple units of the same product, you can create a bundle of different products and offer a discount on them.

4. Seasonal or event-based discount: This is to capitalize on the increase in the shopping behavior of customers around an event, festival, holiday, etc. Like Black Friday, Cyber Monday, Christmas, Boxing Day, etc. A reasonable assumption to offer discounts around an event is that the increase in the volume of orders will cover up the value of discounts offered.

5. Prepayment discount: This type of discount offer works well in subscription businesses where customers are offered discounts if they buy an annual package instead of monthly subscriptions. This locks in the customer for a longer duration and increases the lifetime value of customers.

6. Buy 2 get 1 free: This is similar to volume discount but instead of offering a fixed percentage discount, you can offer an additional unit of the product for free. Giving something for free is possibly the most lucrative offer for any customer and this is why you should test this offer if your unit economics allow you to do so. You can play around with the quantities at which you offer an additional free unit so you can try — buy 3 get 1 free or buy 5 and get 2 free, etc.

7. Free shipping: Shipping cost eats into the profit margins but offering free shipping has become so common that if you don’t, you risk losing customers. So instead of eating the whole cost of shipping, you can designate a threshold order value beyond which you offer free shipping. This ensures that you increase the average order value of your customers so that the shipping cost has the least impact on your profit margins.

8. Credits based on spending activity: This is an alternate way where instead of offering a fixed discount you offer credits/points (virtual currency) to customers based on how much they spend on your website. The higher they spend, the more credits they accumulate which can be redeemed on their future purchases. This incentivizes purchase behavior and also increases the average order value of your customers.

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