Discount Pricing Strategies for eCommerce Businesses
You’ve put together a marketing personalization strategy and have launched campaigns that are resonating with your key customer personas. Yet you’re still offering a sitewide discount to anyone who visits your online store. We get it – it’s easy to overlook discounts in your personalization efforts. By using the right discount strategy, you may just increase customer lifetime value while offering discounts to customers who need an extra push.
How to Create a Discount Pricing Strategy
To create the optimal personalized discount strategy, you’ll want to consider a few factors – and they all come down to understanding your customer groups and their behaviors.
Reaching the Right Audience
Not all personas or customer groups are price sensitive. Some customers are willing to buy with or without a discount, while others need an extra nudge to put them over the edge. Decile helps you understand which customers fall into each of these two categories, so you can provide discounts to only those customers who the message will resonate with.
It’s also important to acknowledge that just because customers are acquired using a discount doesn’t mean that they will only purchase with a discount moving forward. By understanding what their next sequence of purchases might be based on their persona, you can put the right (full priced) products in front of them at the right time.
When it comes to retaining customers, or winning back lapsed customers, discounts can be a great way to incentivize them, which can increase LTV of the customer, lengthen their lifecycle, and increase their frequency of purchase.
Getting the Timing Right
Some customers are only going to purchase during the holiday season, and will only do so when they get your discount. Others may repurchase throughout the year, but the timing has to be right – for example, when they run out of a product. Decile helps you understand where a customer is in their lifecycle and the recency and frequency of purchases. By analyzing this information, you can better understand when they are likely to purchase again, and offer a discount to help them convert (with a larger AOV in subsequent purchases).
Discounting Select Products
There may be certain products your customers are more likely to purchase with a discount. Instead of a site-wide offer, you may choose to offer a promo code on a certain product, or line of products, only. While your customers may be loyal to your line of shampoos, they may only try out the body wash with a discount offer. By targeting specific products that may be of interest, you are more likely to convert on those products, while not losing out on revenue for tried and true products that you know will be purchased regardless. Decile offers reports on product affinity for each of your top customers and personas, as well as sequential purchases. These can help you identify the products you may want to test out a discount on.
Promoting via the Right Channels
Don’t waste your marketing dollars on ad channels that won’t convert. Decile helps you understand which channels are most effective for your customer groups, so you can get the right ad mix in place. For example, reach customers via SMS with highly personalized offers that are likely to convert, versus blanket discounts. Maximize what’s working, and eliminate the waste.
Optimal Maximum Discounts
Is a customer more likely to make more purchases, or larger value purchases, with a higher discount? You may find that the difference between offering 20% and 30% off doesn’t make an impact on their overall customer value. The additional 10% off may not be necessary to hit the same volumes of sales, but can impact revenue. By understanding the optimal discount amount for each persona, you can avoid over-discounting where it isn’t needed.
Ready to put these strategies into action? Decile can help give you the insights you need to understand your customers, optimize your approach to discounts, and help you continue to grow profitably.
Contact us to see if you qualify for a free trial and see your brand’s data in action!