Reducing prices is a great way to attract customers. But there are many other individual benefits to using discounts. Below are just a few creative and advantageous ways that your business could make use of discounts.
Maintain loyal customers
Discounts can be used to reward loyal customers - which in turn can encourage them to continue using your company. Many companies have loyalty schemes in place in which customers can earn loyalty points through an app or a card with repeat purchases to use on future products. However, there are many other forms of loyalty discounts offered by companies such as no-claims bonuses offered by insurance companies and birthday gift discounts offered by many stores to members.
Encourage early payments
When it comes to improving cash flow for small business organizations, early payment discounts can be a great solution. These discounts can encourage customers to pay before the deadline. Not only does this help you to get your money sooner, but it can reduce late payments too (which can be a nuisance for many companies).
Sell nearly expired stock
Do you have stock which is due to expire very soon? Offering discounts could be a way to quickly sell this stock. An example could be a restaurant with several steaks that are due to expire tomorrow. Offering a special exclusive discount on steak meals that day could help you to sell these steaks. Even if you don’t make a profit off of these steaks, it’s better to get something for them than nothing.
Clear products that don’t sell
Got some stock that customers aren’t buying. Even if it’s not likely to expire any time soon, selling this stock could allow you to free up shelf space for stock that is actually in demand. You may be able to encourage customers to buy these previous unwanted items by heavily discounting them. Even if you don’t make a profit, it could be a way to get rid of them so that they’re not just gathering dust.
Reduce low-sales periods
Are there periods when you don’t get many sales? Advertising big discounts can be a way to encourage more customers during these dry periods. Many bars offer ‘happy hours’ during typically slow times of the day - this typically involves drinks being discounts for an hour. An online ski store may meanwhile offer discounts on various ski equipment in the summer months in order to maintain sales. These are typically advertised as ‘off-season sales’. The ‘January sales’ are another popular example.
Make high prices feel more reasonable
If you sell high value items and you want to make their price seem more attractive, you could use the ‘price anchoring’ discount strategy used by many furniture stores. It involves initially introducing a product at a very high price with the intention of discounts it in a few weeks time. The discounted price may still be fairly high, but by displaying the original price beside it you can make it look like a bargain.
Hook in subscribers
Finally, discounts are commonly used to encourage customers to sign up to subscriptions. A customer may pay a discounted rate for the first few months before then paying a normal rate. When offering these discounts, it’s important to be upfront about the original discount price being temporary so that customers don’t feel conned when the price increases a few months in.
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