What can you do to make use of coupons and Discounts, without sacrificing profits

Businesses use coupons and discounts as they draw customers in and motivate them to buy from them rather than the competitors. The problem is, applying coupons or discounts often or sloppily, can permanently take away profits.

JC Penney used to run what seemed like permanent sales. People loved the feeling that they had a fantastic deal. But because the store was offering nonstop discounts, shoppers came to expect it. So when the company switched its tactics and offered selective discounts, customers revolted. The company still hasn't fully recovered from the saga.

It is important to note that couponing and discounts need the use of a balance.

For a business owner You want to draw clients, however you do not wish to lose money particularly in the long run.

Here are eight ways to make use of coupons and discount without losing too much in profit.

1. Motivate a second purchase from new customers

When you rethink the meaning of coupons to prospective customers, you see that it's an effective lead-generation instrument. The point of the coupon isn't making one sale. It's to win a customer in order to sell to them again.

So how do you motivate to make a purchase again?

A good way to do this is by giving them a second coupon after they have made a purchase as a thank you for being an incoming customer. The coupon should be either of smaller or even require a larger cost of purchase to redeem the coupon, for example "spend $100 or more and get 20% off."

Another way to motivate an additional purchase is to get your customer to sign up by providing their email address, and start emailing and messaging them. With email, you can educate the new customer about your products and services and how you can solve the problems they face, what you do to bring them joy or any other benefit you provide. This can all be accomplished with no discounts whatsoever. Stay on their mind and they'll be more likely to return to the store.

MailPoet provides all the tools you need to design a welcome email sequence that will allow you to begin the customer follow-up and nurture process.

2. Utilize tiered coupons in lieu of percents

In the previous tip we covered the method that offers a 20% discount for spending $100 or greater. Think about the advantages this kind of discount structure might bring you. What will most customers do? You'll have to spend more money in order to receive discounts.

Similar strategy to offer tiered coupons, but not with percents. Examples:

• Pay $40, and you'll get $10 back
• Make $100, and you'll get $20 back
• You can spend $250 to get $50 back

If you use this type of system be aware that the amount the customer receives is a fixed figure, even if they are spending more than the minimum.

In this case, a person spending $50 gets $10 back which means you get 40 dollars. If a person spends 80 dollars, they still get their $10 back and you make 70 dollars. In the event that their total cost ends up anywhere above $80, they may be able to increase it more than $100 to get the money back in lieu of. Either way, you make more profit.

With a fixed percent discount your margins remain exactly the same no matter what quantity they spend. If you spend $100 and then receive 20 discount, it's 80 dollars. But if they spend $200, 20% off will now be $40.

The flat dollar discount can work better for you as it boosts the size of your order, but does not increase the discount at the same percentage.

3. Utilize a loyalty programme

While loyalty programs aren't necessarily the best fit for every company, they are an effective in creating sustainable income. After all, some customers enjoy them, and they keep coming returning to see their rewards rise!

Also, this gives you something to communicate with them via email since if they do not buy something for a couple of months, it is possible to remind them how many points they have, and what they are able to buy with points.

4. Set up a subscription or a membership

Discounts are a great way to increase sales if you can turn them into recurring revenue. If you can build a successful subscription system to your organization almost any discount is financially justified.

As an example, let's say you have a $19/month subscription option. If you could prove the customers who subscribe to your service will remain for at least six months, on average you'll earn $114 in recurring revenues. Would you give a $25 discount coupon if someone joined your membership that generated an average of $114 revenues? Would you consider offering the first month for only 99 cents?

To motivate customers to join your service, you may give away prizes and even bigger discounts. This is because you'll get the money back, as well as more. The goal is to lure customers with a huge rewardand continue by offering value to ensure they'll be loyal to your service for years.

Another option is to give a discount on the subscription itself. It could be that everyone who purchases more than $100 receives 20% off their membership. The savings are still worth it for you because of the future recurring revenues.

5. Use product bundling discounts

When you bundle products, you compete less on pricing and focus more by the convenience that you provide your clients. Bundles are more fun, especially if you package them well.

You could offer 20% off the bundle of products that provides your customer and still provides better profit for your business. Why? The average value of your orders is greater, while your shipping and packaging costs are less than if you offered each of those items individually.

6. Incentivize referrals

Word of mouth can be powerful. However, it's not always sufficient to be effective, and it's not happening in the way you'd wish for.

For your most loyal customers, provide them with the incentive to tell your friends about you. Give them coupons they can distribute to friends as well, and should their friends redeem them, the customer will also be rewarded.

This is a smart way to coupon as it can bring in a an additional customer who you might not have otherwise reached, and you turn your current customers to brand ambassadors.

Coupons can be sent like this via email, snail mail or text message. Also, you can provide links to a page on your website that has coupons for customers who are new and ask customers to forward it to their friends.

7. Make upsells available

Best of all, it isn't like you're trying to pressure customers, since you're providing the exact product that they have already decided to buy and just a little more of it.

There are other options for upsells too, including upselling your subscription service. If you're offering coupons or discounts, they provide an opportunity to recoup those profits that you lost from the exact same purchase. And if the item you're offering upsells is connected in any way to the products the customer is already buying, it seems like an appropriate choice to take you up on it.

8. Give a rationale for the sale

This brings us right back JC Penney story. There was no reason for their permanent sale prices. So, customers came to expect , and often demand them.

A way to stay clear of this is to run sales only when there is the need to. You can get creative here. So long as you justify your sale price the most loyal clients will be willing to take you up on it without expecting that they will come back in the future.

Using coupons and discounts by this method increases customer loyalty , and also attracts new customers however it does not tie you in with any future expectations for discounts.

Motives to sell can be found just about anyplace:

• A local team celebrates taking home a trophy
• Thanking customers for X many years of business
• There is a lot of stuff you need to clear out
• Holidays
• Discounts for new customers
• Planning to donate a portion of the sales proceeds to charities
• Profiting from an event in the news which you can connect to your company

Smart discounts and coupons can boost revenue over time.

These ideas all serve all have the same aim that is to move the needle in the direction of attracting new customers without making too big a profit or leading to price-conscious customers.

The things you need are regular customers, loyal customers, and recurring revenue. Coupons and discounts used to generate either or all of them can be a good idea.

Please leave a comment in the comments if you have any other suggestions!