The power of discounts: How to increase traffic and sales?

Almost every eCommerce business offers discounts in some way or another. It's important to understand the psychology behind this marketing strategy and what benefits it can offer your store. In this blog post, we'll discuss the importance of discounts and how you can use them to drive traffic and sales to your store. We'll also provide tips on how to create effective discounts using Magento 2 extensions that will help to attract more customers. So, if you're looking to learn more about discounts and how to use them effectively, keep reading!

Running an online business, you need to consider discounts as an opportunity to unload the warehouse, to increase the loyalty of regular customers and to attract new ones. But effective strategy requires a certain amount of knowledge. There are numerous aspects to know, for instance, if the discount amount is unreasonable/ if there are too many discounts at the same time that cause misunderstandings - there's a risk of working at a loss and not getting the desired result. So, we'll talk about what you need to know, in order not to fail because of discounts.

Discounts must be reasonable

It'll be a big mistake to make discounts based on customers' personal requests or because other online stores do it. Any reduced price campaign you should conduct only for your own marketing strategy and define them in advance. Here're some of the main reasons:

1. to increase orders
2. to sale of trend products
3. to liquidate/renew warehouse storage
4. to increase an average check of purchase
5. to attract new buyers
6. to be competitive

How to determine the optimal discount price

The reduced price's perfect percentage should minimize your margin and not influence the cost. Well, a logical step would be to determine the self-cost.

Find out the incoming price of products from your store. It includes the cost of the goods from the supplier, packaging, part of your employee's salary, delivery costs from the supplier's warehouse, rent, taxes, licenses, permits and other requaried expenses for the product.

Often, entrepreneurs can see that their competitors offer a more significant discount than they can afford for the same product. Don't rely on that information upon your decisions. Such prices might belong to not such "honest business" and can't guarantee good results.

How to avoid going into loss-making discounts on products:

• Offer discounts sparingly, and only when necessary.
• Consider demand when planning discounts.
• Study your margin before implementing a discount.
• Analyze your competitors' pricing strategies.
• Choose the right time to offer a discount.

The owners of the online stores have a different attitude to the use of discounts: some point to the possibility of obtaining a good income, and others claim that all these sales lead to gradual bankruptcy. Trade experts are trying to understand this issue and highlight these seven ways to use discounts without compromising profit:

1. Don't use discounts if you don't want to combine them with other working methods to attract new customers. If, from the first days of the online store's existence, it offers buyers different kinds of promotions and discounts, it can cause distrust in the seller. Users can feel the store is trying to bribe them. Therefore, an online store should buy high-quality and well-thought-out market proposals to attract the target audience, which has a much more significant effect than just a discount.
2. Proper planning allows you to think of a suitable sales strategy and, thus, set your store free from the dependence on discounts' frequency. In today's online business, seasonality deserves special attention. It means you should monitor in which months profits increase and in which, on the contrary, decreases. Sale Category PRO extension for Magento 2 stores will help you to automatically remove products from the particular price group when the sale period expires. You'll save working hours by thinking through sales strategies in advance.
3. Distribute discounts for the most unprofitable seasons. For example, if the decrease in sales of products occurs in the autumn, you should announce discounts from September to the end of November.
4. Customers should get to know about your discounts' existence beforehand, so you need to advertise in advance. All well-known methods will be suitable: bright posters on the web store pages, banners, newsletters, advertising through social media, SMS-mailing and others.

5. Owners of online stores can resort to a known trick: a regular customer of the store, or the person who made at least one purchase before, shouldn't know about specific running promotions. As a rule, such discounts are aimed for new customers or those who are listed in the customer database, but they haven't bought any products for some time. It'll raise the sales, so you need to develop a special trade offer that will «push» them to make a purchase.
6. Large-scale promotions are recommended to use not more than 4 times a year. However, it's possible to organize small sales, which can be devoted to a particular product or targeted to a specific group of customers. In general, such price reduction is aimed for less active buyers and the group of customers who want to buy something but have some doubts. With the Sale Category PRO extension, the automation of the process of adding and removing goods for recurrent promotions will work perfectly.
• In this case, we recommend you pay attention to the high-quality modules for Magento 2 that work in tandem: Smart Related Products & Sale Category PRO. Thanks to their functionality, you'll be able to display the cross-selling and upselling items with and without discounts! In the Sale Category PRO module, you'll find a configuration that allows you to set up predefined products. Whether they have a special price or not, you can manually determine their visibility on a page.
7. Apply a discount on one product to sell another. For example, a buyer comes to make a small purchase and can decide to buy a more expensive item in addition. Or a discount can be set on one part of a product. For instance, specific lens types can have reduced prices, but glasses' frames have the regular price.

It can be tough to find the right balance between giving customers what they want and maintaining healthy profit margins, but using discounts strategically can help you do just that. By analyzing your past discount results and adjusting your plans accordingly, you can use discounts to increase demand for certain products and boost your overall revenue. And with our Sale Category PRO module, configuring automatic actions to monitor the discount processes in your online store has never been easier. So why not give it a try?