Retailers have always used discounts as a way to attract new customers and increase sales. This has become even more prevalent in recent times when it has become so competitive online and businesses need to do all that they can to stand out from the crowd. So, why do retailers offer discounts and what are a few of the most common types?
What are Discounts?
First, it is worth outlining exactly what discounts are. Essentially, these are reductions in the cost that a consumer has to pay for a product compared to its normal price. This gives consumers the opportunity to make savings on their purchases and for businesses it attracts customers to their company over the competition.
Why Do Retailers Offer Discounts?
So, why offer discounts if it means that products are cheaper? It is a balancing act, but the idea is that the increase in sales will offset the price of running the discount so that it has a positive impact on the bottom line while attracting new customers to the business (and away from the competition). Discounts can have a powerful impact on consumer behaviour as it can improve the customer experience and can create a sense of urgency, which encourages people to buy now instead of later.
There are many different types of discounts that retailers use to attract customers to the business.
Money or percentage off: The simplest and most common is simply a certain amount of money or a percentage off the original price.
BOGOF: Buy one, get one free is another common discount that retailers use. This is particularly effective because it encourages consumers to buy products that they might otherwise have passed on in order to get an additional product.
Tiered threshold: Tiered threshold discounts can be a highly effective way to increase order value. They work by offering a discount once a consumer hits a certain threshold with their order, which encourages them to spend more. As an example, this might be 10% off when you spend over £50.
Free shipping: The cost of shipping is one of the main reasons why consumers abandon their carts. Offering free shipping is an intelligent way to increase conversions and attract customers over the competition. You could even combine this with one of the above strategies, such as free shipping when you spend over a certain amount.
Discounts can be an intelligent way for retailers to attract new customers and increase sales. From a consumer standpoint, they can help you to make savings but you must always think through every purchase to see if you are really making savings or if you are spending money that you would not normally be spending in order to qualify for the discount.
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