Psychology Of Discounts: Boost Your eCommerce Sales The Smart Way
Everyone loves a deal, no matter how large or small. Customers often search for coupons or discounts on products that they want or need. While it might not be realistic for you to always be running a special or offering a discount, there is an aspect of psychology that goes into discounts and how it can affect customer behavior and perception.
How Discounts Affect Behavior:
Offering discounts to your customers can affect their behavior in a variety of ways. One of the first reactions they are likely to have is excitement, and maybe disbelief depending on how good of a deal they think they are being offered. Being able to get a product or service that they want regardless at a lesser price is sure to intrigue anyone. Running a special or sending a coupon for a popular item can also create a sense of urgency among customers. Key phrases such as “while supplies last” or “limited time offer” encourage customers to shop the deal quickly. Creating urgency also reduces the likelihood of them shopping around and purchasing from one of your competitors. If it is a product that the customer already likes and uses, they might stock up on the product or purchase it for a loved one. This helps spread your brand awareness and promotes customer loyalty. Keep in mind that if you offer discounts too frequently, customers might come to expect them and stop purchasing full price products.
How Presentation Affects Perceived Value:
The way you phrase your discount offer can make a big impact on how customers perceive the value of the deal. Phrase your discounts so customers feel like they are getting the best deal, and are excited to purchase from you. For example, say you were selling sunglasses for $60 and wanted to run a promotion for 25% off. Here are few ways that this type of sale is commonly run: 1) 25% off of $60, 2) $15 off of $60, 3) Buy one for $60, get one 50% off. All of these end up being the same discount, but most customers will see the 50% discount as the best deal. How you phrase your offers can make a huge difference in your sales!
How To Make Discount Work:
While the point of discounts is to offer your customers a good deal and grow your sales, you also need to put some work into the details of your special offer. What do you hope to accomplish by running a special? Do you want to clear out your inventory to make room for a new product? Encourage customers to try a less popular product? Boost sales during a slow season? Whatever it is, decided what you are hoping to gain before running the sale. Examine your budget to make sure that offering the discount is feasible for you financially, and how much you can afford to offer off of your product. Running A/B tests to see which promotion works better can also help you decide how to best offer discounts in the future. Consider different types of sales and test those as well. Buy One Get One (aka BOGO), percentage discounts, tiered discounts (such as buy 2, get 1 free) or special bundles are all ways you can offer customers lower pricing. If you are selling through BMT Micro, we make all of these options (and more!) easily available for you to use.
Understanding your audience and creating a plan are the best ways to run successful promotions. Make sure to use the best phrasing and presentation to catch their eye and encourage them to purchase from you. What are some of the best deals you have offered? Let us know in the comments!