5 Tips for Diversifying Your Discounts This Holiday Season
Thanksgiving is just about here and the average American probably has the same menu: turkey and stuffing, followed by pumpkin pie and a ton of shopping. Between low unemployment and high consumer confidence, eMarketer projects this year’s holiday sales to top $1 trillion for the first time. That number is all the more staggering once you consider that it’s $1 trillion after the discounts.
This year was one of the worst for data breaches, Under Armour and Facebook among them, and consumers are increasingly reluctant to share their data. Still, creditcards.com found that 23% of consumers will gladly share their information in exchange for an incentive, while 43% could be persuaded if the discount is good enough.
Given how much consumers spend on holiday gifts, discounts will obviously factor into people’s purchase decisions. They should also play into your holiday marketing strategy, with “strategy” being the operative word.
Discounts are a powerful tool for marketers, crucial for hitting those fourth-quarter numbers. But they’re also dangerous. As our Chief Commercial Officer Cassie Young told Forbes, “Training customers to buy only on promotion works against the long term customer value of a business.”
We recommend diversifying your discounts, testing extensively to learn which ones work best for different customers. That way, you can boost holiday sales without undermining your margins, both now and in the future. Here are five tips:
Time-bound discounts — those exchanging a prompt purchase for delivery by December 23, for example — are particularly powerful during the holiday season. If you use this strategy, be sure to tell your customers early and often. Flash sales are another foolproof holiday strategy, especially when you work a countdown clock into an email message’s creative.
With this Black Friday preview for its email subscribers, Home Depot conveys exclusivity. The retailer also creates a sense of urgency, stressing that this 30% discount is both temporary and limited.
Tiered discounts — save $20 with a $200 purchase, for example — are another great way to boost order values. Consumers generally see volume-based discounts as familiar and reasonable. As a result, this discount is less likely to hurt your brand in the long run.
PacSun combines time-bound and tiered discounts with a little something for everyone. Any customer can get 15% off, but higher spenders save more. By using nice round numbers, PacSun also makes it easier for customers to calculate their savings in their heads, increasing the likelihood they’ll level up.
Shipping’s effect on ecommerce can’t be stressed enough. Ever wonder why cart abandonment rates are so high? According to Accenture research, having to pay for shipping is a common catalyst, second only to price. You can always offer free shipping for a limited time or for orders of a certain size, which blunts the economic impact of free shipping and encourages customers to keep shopping. If possible, we’d also recommend testing free shipping vs. further discount to see where the biggest impact is made.
Target is one retailer deploying the free shipping strategy this holiday season. In a competitive move against Walmart and Amazon, Target is offering free two-day shipping for all customers through December 22. After the holidays, customers will need to spend at least $35 or be REDcard memberships for the same privilege.
Free Gift or Incentive
Everyone loves holiday gifts, even the people who are mid-buying them. These incentives are enticing, but demonstrate what a powerful pair data and discounts can be. Proper data collection enables retailers to see how many shoppers follow up their freebie with a full-priced purchase. If you do this well, you may even create some new loyalists by February.
Google has yet to release its most-searched holiday gifts this year, but the iPhone X topped last year’s list. The device is still popular and almost certainly helped Best Buy catch consumers’ eyes with this incentive-based discount.
Speaking of loyalty, linking discounts with loyalty programs is another great way to offer perks without destroying profit margins. Offer loyalty bonus points to new members who convert straightaway and increase the likelihood they’ll come back. Leveling up customers who make particularly big purchases is another strategy we’d recommend. Considering how much people spend during the holidays, loyalty points or status are likely to seal the deal for some shoppers.
When someone signs up for a brand’s mailing list or loyalty program, they’re clearly interested. Saks Fifth Avenue capitalizes on that moment with 10% off for new subscribers, enticing them to become regular customers.