Discount Strategies for Your Small Business
Consumers are always after a bargain, and retailers are generally great at providing near-constant discounts and perks. Think free shipping and returns, percentages off a purchase, and store credit card promotions. Then there are the Black Friday, Cyber Monday, Labor Day, and any other number of holiday-themed sales that always seem to be happening. The result is something called “sale fatigue,” which makes customers essentially always expect a discount.
According to a report from First Insight, “45 percent of women must see a markdown of 41 percent or greater to even enter a store, and 39 percent of consumers are willing to travel to another store to see if they can buy an item at a lower price.” Consumers are conditioned to never pay full price, and companies are having to get real creative – especially small businesses, who might not be able to financially compete with the big chains. Here are some great discount ideas to help your small business get a leg up on the competition.
Quality over Quantity
Several retailers have subscribed to the idea of offering less frequent but larger discounts to their shoppers. The benefit with this is that it increases motivation to shop when you do have a sale, since consumers aren’t expecting a regularly scheduled discount from you. Once or twice a year, try offering a big discount to your customers. Because offering sales year-round can make discounted prices feel like the regular price to a shopper, hosting sale “events” that are less frequent can increase your sales in the long run.
Did you know that only about 20 percent of your customer base is considered loyal, but these folks comprise over 50 percent of your sales? We’ve said it before—engaging your existing customer base is a key to driving sales. Loyalty programs offer perks not routinely given to the casual shopper. You can count on these regular customers to come back time and again, so providing them with loyalty incentives is a great sales driver.
Another way to tap into those loyal customers is offering a referral discount. When customers refer your business to their friends and family, a great strategy is to give both parties a nice referral discount. This strategy works best with online sales, as you’re able to capture email addresses and deliver a coupon seamlessly. Referral programs are also a great way to increase your customer base—hopefully turning those “referrals” into repeat customers.
Increase Your Perceived Value
If you provide customers with knowledge about why your small business is unique, they may be more inclined to shop with you versus the competition. Do you offer special services or money-back guarantees? Are your products sourced sustainably? What is it that you have that your competition doesn’t? Tout these things to your existing and new customers so they understand why your store holds the competitive edge. This is an ideal way to increase sales without actually discounting a thing.
We’re always covering marketing tips and strategies for small businesses over at the Financial Pantry. Be sure to check back regularly for our latest articles, plus information on everything from small business financing to expansion projects and so much more.