Your Goal-Setting Manifesto

As a small business owner, it is essential to keep attracting new customers while retaining existing ones. A great strategy to achieve this is to work on your pricing and discounting strategy. Offering discounts can be a powerful tool to attract customers, but before you do so, there are a few things to keep in mind.

Firstly, you need to consider the product's price. If the original price is already competitive, then offering too many discounts may not be necessary. However, if the product's pricing is higher than what the market offers, then offering a discount can be an excellent strategy to attract customers.

Secondly, when offering discounts, you need to ensure that the discounted price is not too low that it ends up eating into your profits. You must calculate the minimum price at which you can offer a discount without compromising on your profits.

Thirdly, you need to consider the product's value and urgency. If you offer regular discounts on a product, it can decrease the product's value and urgency for buyers, as they will know that they can purchase the same product at a discount anytime. Therefore, it's essential to offer discounts strategically and at the right time to maintain the product's value and urgency. 

By keeping these factors in mind, you can create a successful discounting strategy that attracts customers while retaining your profits.

Aim of Discounting

Discounting is a common strategy used by businesses to achieve several goals. Firstly, it helps to clear old inventory or stock that has been sitting on the shelves for a while. By offering a discount, businesses can encourage customers to purchase these items and make space for new products. This is particularly important for businesses that have a high rate of turnover or are looking to introduce new lines.

Secondly, discounting can be used to attract new customers who may not have considered using a particular product or service before. By offering a discount, businesses can encourage these potential customers to give their products a try and hopefully gain their loyalty in the long run.

Lastly, discounting can be used to help businesses reach their sales targets during a slow period. By offering discounts, businesses can stimulate demand and encourage customers to make purchases when they might not otherwise have done so. This can be particularly helpful during seasonal slowdowns or times when consumer spending is generally low.

Techniques of Discounting

Loyalty programme

A loyalty programme can be an effective tool for small business owners to show appreciation and gratitude towards their customers. It is a way of rewarding customers for their loyalty and incentivizing them to purchase more products from your business. By offering a loyalty programme discount, you can encourage customers who have made numerous purchases or spent a significant amount of money to keep coming back to your business.

You can design your loyalty programme to offer discounts based on your customers' buying habits. This can help you upsell your products by persuading your customers to purchase more items. For example, you can offer a discount to customers who purchase a certain number of products or products from a specific category. This can also help you to introduce your customers to new products and encourage them to explore your product range.

Moreover, loyalty programme discounts can also be used to entice customers to purchase more expensive products. You can offer a discount on a high-end product to customers who have demonstrated loyalty by making multiple purchases. This can encourage them to splurge on a more expensive product that they may not have otherwise considered.

Implementing a loyalty programme can be a smart business strategy for small business owners. It not only helps to build customer loyalty but also encourages customers to purchase more products from your business, ultimately leading to increased revenue and profits.

Seasonal discount

A seasonal discount is a promotional offer that can be extended to all customers of a business. This type of discount is typically offered by businesses that need to clear out their inventory of seasonal items before the end of a particular season. For example, a garment shop may choose to offer a discount on winter coats and sweaters after the winter season ends, as no one will be purchasing winter clothing during the upcoming summer season. By offering this discount, the business can sell off their remaining winter inventory without negatively impacting their bottom line. Seasonal discounts are a great way for businesses to clear out their inventory while offering their customers a great deal on seasonal items.

Promotional discount

Promotional discounts are an effective marketing strategy to increase customer traffic and sales on your store or website. These discounts are usually offered for a limited time and are given at the end of the product cycle or when you have launched a new product. By giving promotional discounts, you can attract the attention of potential customers and encourage them to make a purchase. 

When offering promotional discounts, it's important to determine the right timing and duration. For instance, some people offer these discounts during seasonal events when customers are more likely to purchase items. You can also offer them during special occasions like Black Friday or Cyber Monday to drive more traffic and sales to your store. 

Remember that promotional discounts should be targeted to the right audience and should be clearly communicated through different marketing channels. By doing so, you can generate more interest and engagement from potential customers and ultimately drive more sales for your business.

Volume discount

In business, offering volume discounts is a common strategy used to incentivize customers to purchase larger quantities of products. This discount is typically offered to customers who purchase goods or services in bulk, such as companies who regularly buy products in large quantities from suppliers. This strategy is often implemented by businesses in various industries, including retail, manufacturing, and wholesale. 

For instance, if you are selling office supplies and a company purchases 20 packets of stationery from you, you can offer a 20% discount on the total purchase price. However, if the same company buys 50 packets of stationery, you can provide a larger discount to encourage more significant purchases. This approach benefits both the customer and the seller, as the customer can save money on their purchase, while the seller can increase their sales volume and revenue. 

Overall, volume discounts are an effective way to encourage customers to buy more and can be a useful tool for businesses looking to increase their sales and build long-term relationships with their customers.

Bundled discount

The bundled discount is a pricing strategy that can be used by businesses to offer a discount to customers without decreasing the price of their product. This strategy involves bundling two or more products together and offering them as a package deal at a discounted price. By bundling products together, businesses can offer additional value to customers and encourage them to make a purchase.

For instance, let's consider the Body Shop, a popular beauty and wellness brand that uses the bundled discount strategy effectively. The Body Shop offers a variety of products that can be bundled together to create a discounted package deal. For example, the brand may bundle a shower gel and face mask together, or a face pack and face cream together. The bundled package is sold at a lower price point than if the products were purchased separately.

Customers who opt for the bundled deal are able to save money on their purchase, making the offer more attractive to them. By using this pricing strategy, businesses can increase the perceived value of their products and boost sales. Moreover, the bundled discount strategy can also help businesses to move inventory and maintain healthy profit margins.

First-time shopper discount

As a business owner, offering a first-time shopper discount can be a great way to attract new customers. This discount is specifically designed for new customers who are making their first purchase from your store. By offering this incentive, you can encourage them to try out your product and experience the quality for themselves. 

The idea behind this discount is to create an opportunity for potential customers to engage with your brand without taking on a significant financial risk. It helps to build trust in your product and brand by demonstrating your commitment to customer satisfaction. If they like the product, they are more likely to become repeat customers in the future.

It is essential to make sure that the discount is attractive enough to entice new customers, but not so high that it will negatively impact your profitability. Finding the right balance is crucial in creating a successful first-time shopper discount strategy. 

Overall, offering a first-time shopper discount can be a smart way to boost your customer base and increase brand loyalty. It is a simple yet effective tactic that can produce great results when executed correctly.

Early bird discount

When it comes to launching a new product, one of the most effective ways to generate buzz and encourage early sales is by offering an early bird discount. This is a promotional strategy that involves offering a pre-discounted price for a new product to customers who order it ahead of its official launch date. 

To implement an early bird discount, businesses can use a variety of marketing tactics such as flash ads, stickers, SMS, emails, social media posts, and other forms of advertising to let customers know that a new product is coming soon and that they can get a discount if they order it early. This approach can be particularly effective for generating interest and excitement around a new product, as customers are often more likely to purchase something if they feel like they are getting a good deal.

One key advantage of using an early bird discount is that it can help businesses to build momentum and generate early sales for a new product, which can be crucial for ensuring its success in the market. By offering a discount to the first 50 customers who order the product, for example, businesses can create a sense of exclusivity and urgency that can encourage more people to place their orders early. This approach can help to create a sense of scarcity and excitement around a new product, which can help to drive sales and build brand awareness over time.

An early bird discount can be a powerful tool for promoting new products and generating early sales. By using a range of marketing tactics and creating a sense of exclusivity and urgency, businesses can encourage customers to order a new product before its official launch date and build momentum for its success in the market.

Value-added offer

When it comes to pricing your product or service, instead of offering discounts, consider providing a value-added offer to your customers. This means providing an extra service or product that benefits the customer, without any additional cost. For instance, if you sell computer hardware, you can give an installation guide or free installation support to your customers. Alternatively, if you are a hairdresser, you can offer a free treatment or a blow-dry or a haircut to your customers. By doing so, you are not only adding value to your customer's experience, but also building a loyal customer base.

Event-based discount

A popular marketing strategy employed by many brands is to offer event-based discounts. These discounts are usually offered for a limited period, such as 2 to 3 days, and are accompanied by attractive schemes that are applicable on almost every product. For instance, Big Bazaar, a renowned retail chain, conducts a 5-day sale event where customers flock to purchase items for their homes at discounted prices. 

However, it's not mandatory to have such a lengthy sale event. Instead, you can choose to offer discounts on specific occasions, such as your store's anniversary. This way, you can attract customers and create a buzz around your store, encouraging them to make purchases during the discount period. By offering event-based discounts, you can not only increase your sales but also create a loyal customer base who are attracted to your brand's offerings.

Discounts for special group

One marketing strategy that can be employed by businesses is offering discounts to a particular group of consumers throughout the year. This approach involves identifying a specific consumer group and providing them with discounted prices on your products or services. The goal of this strategy is to attract and retain customers from the chosen group by offering them a more affordable option than what is generally available. 

To implement this strategy, a business can choose a particular group of consumers such as army officials, school kids, or pregnant women/mothers. Discounts can be given to these groups based on their unique needs and preferences. For instance, a store may offer a 10% discount to army officials as a token of appreciation for their service to the country. Alternatively, a store may provide a discount to pregnant women/mothers to help ease the financial burden of purchasing baby products. 

This discount strategy can be a beneficial approach for businesses looking to target specific consumer groups. By providing discounted prices, businesses can attract and retain customers from the chosen group while also promoting a positive image of their brand.

Cash discounts

Cash discounts are a type of incentive offered to customers who make payment through cash. These discounts are usually provided on the base price of the product and are intended to encourage customers to pay in cash rather than using other payment methods such as credit or debit cards. By offering cash discounts, businesses can generate cash flow and reduce the transaction cost of the customer, which can ultimately lead to greater profitability.

For instance, a business may offer a discount of 2% if the customer pays the bill within 10 days. This discount is commonly given in business-to-business (B2B) transactions, particularly when the client is negotiating on price range. By offering cash discounts, businesses can also incentivize customers to pay their bills on time, which can help improve their cash flow.

It is important to note that cash discounts are not the same as trade discounts. Trade discounts are price reductions that are offered to customers who purchase goods in large quantities or on a regular basis. Cash discounts, on the other hand, are offered to customers who pay in cash within a specific time frame.

Cash discounts can be a valuable tool for businesses looking to improve their cash flow and reduce transaction costs. By offering these incentives, businesses can encourage customers to pay in cash and improve their bottom line.

Store credit/subscription credit

One of the ways to retain customers and encourage them to make purchases from your store is by offering them store credit or subscription credit. By providing store credit, you're essentially giving your customers a gift card, which they can use to buy products from your store. Similarly, subscription credit allows customers to subscribe to your services or products using the credit you've provided. This not only creates loyalty but also increases the likelihood of repeat purchases, as customers will want to use their credit on your store. So, if you're looking to incentivize your customers and increase sales, offering store credit or subscription credit is a great strategy to consider.

Exclusive membership

As a business owner, providing your customers with an exclusive membership could be an excellent way to show them that you value their loyalty and support. This membership should come with unique benefits or discounts that are not ordinarily available to regular customers.

Your premium customers who have been purchasing from you for a long time deserve to be rewarded for their loyalty. By offering them exclusive benefits, such as personal training sessions, gift shop credit, and discounts on health drinks, you can make them feel appreciated and valued.

For example, if you run a gym, you can offer your premium customers discounted rates on personal training sessions, free access to exclusive workout classes, and even a dedicated personal trainer. Additionally, you could give them gift shop credit that they can use to purchase gym apparel, supplements, or other fitness-related products.

The key to providing an excellent exclusive membership program is to make it feel special and personalized. By doing so, you can create a strong bond with your customers, and they will continue to support your business for years to come.

Refer a friend

When you refer a friend to purchase something from a particular store or website, you become eligible to receive a discount on your next purchase from the same store or website. This discounting strategy is known as referral marketing, and it serves two purposes: first, it helps businesses attract new customers through word-of-mouth recommendations from their existing customer base. Second, it encourages repeat business from existing customers by offering them an incentive to invite their friends and family to shop at the same store or website. This approach is a win-win situation for both the business and the customer, as it increases customer loyalty and satisfaction while also generating new business.

Discounts on social media

Social media provides a great platform for businesses to promote their products and services. One effective way to do this is by offering discounts through various methods such as contests, polls, and surveys. By doing so, businesses can increase engagement with their customers and build a loyal following of satisfied customers.

For instance, a business can run a contest on social media where customers have to share a post, tag friends, or answer a question to enter. The prize could be a discount on the business's products or services. Similarly, conducting polls or surveys that reward customers for sharing their opinions is another way to increase engagement and offer discounts.

By engaging with customers on social media, businesses can build a strong connection with them and improve their overall experience. Customers will appreciate the opportunity to interact with the business and share their thoughts, and the business can use this feedback to improve their products and services.

Offering discounts on social media is an effective way for businesses to increase engagement with their customers, build a loyal following, and ultimately increase sales.

Parameters of discounting

When it comes to providing discounts to your customers, it's important to keep in mind that you can't just do so based on your mood. There are several parameters that need to be considered in order to ensure that your discount strategies are profitable or at least don't result in a loss. 

One of the key parameters to consider is the gross margin of your business. This can be calculated by subtracting the Cost of Goods Sold (COGS) from the sales revenue. Knowing the gross margin can help you determine how much of a discount you can offer while still making a profit.

Another important parameter is the markup. This refers to the cost of purchasing the product from the manufacturer, and then adding a markup to the selling price to cover overhead expenses and earn a profit. By understanding the markup, you can identify the maximum discount that you can offer without reducing your profits.

Finally, it's crucial to calculate the break-even point. This calculation helps you determine the number of sales required to cover your business expenses and make a profit. By knowing the break-even point, you can set your discount rates in a way that ensures that you're not losing money. 

While offering discounts can be a great way to attract customers, it's important to keep these parameters in mind to ensure that you're not taking a loss on your sales.

Calculate the best discount price

If you're looking to determine the optimal discount price for a product or service, there are several factors you can take into consideration. One important metric is the gross margin, which is the difference between the cost of producing the item and the revenue it generates. Another useful figure is the markup, which is the percentage increase in price from the cost of production. Additionally, you may want to factor in the break-even point, which is the point at which your total revenue equals your total costs. By analyzing these metrics and other relevant factors, you can calculate the best discount price that will maximize your profits while also appealing to potential customers.

Market your discount

If you are looking to increase sales by offering discounts to new or inactive customers, it's important to remember that simply offering a discount may not be enough. In order to effectively promote your discounting strategy, you will need to invest in marketing efforts. 

There are several ways to market your products and let people know about your discount offers. Using marketing tools, such as Google AdWords, Facebook Ads, or other advertising platforms can help you to reach a targeted audience and increase your visibility. 

Social media platforms like Facebook, Instagram, Twitter, and LinkedIn are also great places to promote your discounts and engage with your audience. Posting about your discounts, sharing customer reviews, and creating content related to your products can help to generate interest and increase your reach.

Email and SMS marketing are other effective ways to reach potential customers and keep them informed about your discount offers. By collecting contact information through your website or in-store, you can send targeted messages to your subscribers and keep them engaged with your brand.

Another effective marketing strategy is to offer a "refer a friend" deal, where customers can receive additional discounts or rewards for referring their friends and family to your business.

When it comes to marketing your discounts, it's important to keep your costs low and avoid overspending. By carefully managing your marketing budget, you can maximize your return on investment and ensure that your profit margins remain strong.

Competitors

When it comes to setting prices for your product, it's important to be aware of what your competitors are offering. Take a look at their pricing strategy and any discounts they may be offering to their customers. This will allow you to gain a better understanding of the market you're operating in and help you determine your own pricing strategy. By keeping a close eye on your competitors, you can position your product more effectively and ensure that you remain competitive in the market.

Duration of sale

When planning a sale for your products, it's important to consider the duration of the sale. Keep in mind that during the sale period, you'll be offering your products at a discounted price. It's essential to have a clear idea of how long the sale should last. You should consider factors such as the type of products you're selling and the target audience you're catering to. Depending on these factors, you can decide whether your sale should go on for 10, 15, or 30 days. A longer sale duration may attract more customers, but it could also reduce the sense of urgency to make a purchase. On the other hand, a shorter sale duration may create a sense of urgency, but it may not allow enough time for customers to make a purchasing decision. Finding the right balance is crucial to make the most of your sale and maximize your profits.

Offer to upsell

When interacting with a customer who is purchasing discounted items, it is always a good idea to suggest non-discounted items that may also be of interest to them based on their profile. This approach not only helps increase your margins, but it also provides the customer with more options to choose from. By upselling to the customer, you are offering them the opportunity to enhance their purchase with complementary products that they may have not considered before. This can lead to a more satisfying shopping experience for the customer, and potentially higher revenue for your business.

Know your customer lifetime value

Understanding the customer lifetime value (CLV) is crucial for any business that aims to grow and succeed. CLV is the estimated value that a customer will bring to your business over their entire relationship with you. By analyzing CLV, you can identify how much revenue each customer will generate for your business and how much it will cost you to acquire and retain them.

Knowing your CLV can help you to determine which customers are the most profitable and the most likely to stick with your brand. By focusing on retaining these customers, you can build a loyal customer base that will provide a steady stream of revenue for your business over time. This is where marketing strategies such as e-mail marketing, social media marketing, and discounts come in handy. 

It is essential to keep in mind that while acquiring new customers is crucial, retaining existing customers is equally important. By analyzing the areas of improvement and addressing them, you can not only keep your current customers happy but also improve the customer experience for future customers. By regularly reviewing your CLV, you can make informed decisions and allocate resources to maximize your revenue potential and overall business growth.

Know what to markdown

When it comes to deciding which products to markdown, it's important to keep a few things in mind. First of all, any new products that have just been added to your inventory and for which the customer is willing to pay the full price should not be discounted. This can help ensure that you maintain healthy margins and don't miss out on potential profits. Instead, focus on seasonal products that are likely to see a drop in demand as the season comes to an end. By marking these products down for discounts, you can move them out of inventory more quickly and free up space for new items, while still maintaining reasonable profit margins. Ultimately, the key is to strike a balance between offering attractive discounts to customers and ensuring that your business remains profitable and sustainable over the long term.

Use predictive analysis

Are you looking for ways to efficiently manage your inventory and pricing of products? If yes, you should definitely consider using predictive analysis tools. These tools are particularly useful if you run a point of sale business, as they can help you accurately predict the purchases your customers are likely to make in the future and the stock that will be in high demand.

With the help of predictive analysis tools, you can optimize your inventory levels and ensure that you always have the right products in stock. This, in turn, can help you increase customer satisfaction and loyalty, as customers are more likely to return to your store if they know they can find what they're looking for.

Moreover, predictive analysis tools can also help you optimize your pricing strategy. By analyzing past purchase data and market trends, these tools can help you determine the optimal price for your products, maximizing your profits and helping you stay ahead of the competition.

In short, if you want to take your point of sale business to the next level, you should definitely consider using predictive analysis tools.

Negative Effects of Discounting

Discounting is a common strategy used by businesses to increase sales and attract customers. However, if not done strategically, it can have negative effects on your brand and revenue. In this regard, it is essential to know the proper ways of discounting to avoid pitfalls.

One of the major negative effects of frequent discounting is that it can eliminate the sense of urgency in your customer's mind. If you are offering discounts frequently, customers may start to expect them, and thus, they may wait for the next discount offer before making a purchase. This can lead to a decrease in sales and revenue in the long run.

Another pitfall to avoid is offering high discounts on premium and expensive products. If you are offering a straight discount of 50% on such products, customers may start to doubt the quality of the product. In such cases, it is better to offer a smaller discount or a percentage off, rather than a straight discount.

Additionally, offering discounts without any apparent reason can also have a negative impact on your brand. Customers may feel that you are not making a profit or that your brand is not doing well. Hence, it is better to have a strategic approach to discounting and offer discounts during festive seasons, seasonal discounts, or promotional discounts.

It is important to note that pricing is a fundamental strategy in the growth of your brand, and if you want to earn a profit from discounting, you must follow a strategic approach. Matching your goals with the right type of strategic discounting can help you deal with common challenges easily, and the results would be sales and revenue-oriented. Therefore, it is crucial to plan and execute discounting in a strategic manner to avoid negative effects on your brand and revenue.

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