We all love a bargain, right? There’s nothing quite like getting to checkout and having a 10% off code in your back pocket from one of your favorite brands. Running sales is just part of the ecommerce experience – we’re all familiar after all with big sales periods like Black Friday/Cyber Monday. The right discount at the right time to the right audience is the key to those sales boosts every brand hopes to see following a promotional period, but in order to get that winning combination you need a discounting strategy.
Why it’s important to have a discounting strategy
Discounting is a big part of any business, but it’s important that you plan when you have sales, what you’re going to discount, and how you’re going to promote it. If you don’t, you run the risk of being seen as a discount brand which in turn eats into your sales the rest of the year when you aren’t running a sale. When a brand is seen to have frequent sales, then customers don’t see the point in buying any other time - they’ll just wait for the next sale. Planning sales out in advance for specific times of the year, and around your new product development schedule will ensure that customers are buying all year round and not just when you send them a discount code.
Planning a sales calendar
One of the most helpful things you can do for your discounting strategy is to have a calendar of when you’ll run sales. That way, you can see clearly a timeline for sales and never run the risk of discounting too often. The best way to start a calendar is to start with the key sales periods throughout the year:
- January: New Year’s
- May to July: Summer Vacation
- August: Back to School
- November: Thanksgiving, Black Friday/Cyber Monday
- December: Christmas
From here, you can start to build other key dates into your calendar that are either additional holidays such as Mother’s/Father’s Day, Chinese New Year, 4th of July etc., or days specific to your industry such as International Women’s Day, National Library Week, etc.
Be selective about which holidays you plan to run promotions for, don’t simply add every holiday! When choosing the periods you’ll run promotions for, make sure that it’s relevant to your brand, products, and audience. If you don’t sell anything related to students, then it doesn’t make sense to run a back-to-school promotion.
Once you’ve added those to your calendar, look at how spaced out they are and consider removing a couple here and there to make sure you’re not running promotions too frequently. From there, prioritize the scale of sale you’re going to run. Reserve big sales for key periods like BFCM, and run smaller promotions like discounts on specific lines or products for additional holidays or industry specific days.
Things to consider when planning a sale
So you’ve got a calendar in mind, now you need to plan the sales themselves. There are a lot of different factors that go into each sale, so let’s look at a few of them.
What are the goals behind each sale?
Of course the easy answer here is “to make more money”, but you’ve got to get more specific! The goals you choose will help guide the rest of the plan for each sale. Some goals you could choose:
- Bring in new customers
- Target existing customers
- Increase brand awareness
- Clear old inventory
- Sales boost in industry off-season
With key sales periods like BFCM and holiday shopping, it’s easy to think that you don’t need one of these goals because it’s a common sales period and everyone is running sales. However, even if every brand is doing a sale at a specific time you still need to have a greater goal in mind for each sale. You might run a promotion during BFCM where you’ve got one discount that’s focused on clearing old inventory, and then a lower value discount that looks to engage new customers.
What do you want to promote?
The first thing to consider is what products exactly you want to include in each promotion. You could either promote individual products, specific collections, or go sitewide. The route you choose will depend on the goal behind your promotion, and if it’s for a specific occasion e.g. Black Friday or a smaller holiday like Father’s Day. If your goal is to clear old inventory, the obvious answer is to run a promotion on specific lines or collections. If, however, you’re running a BFCM campaign and one of your goals is to clear old stock, you might run some sitewide promotions but with a heavier discount on those lines that need clearing.
Who do you want to reach?
Discounting is just as much marketing as it is sales, so it’s beneficial to treat it like you would any other marketing exercise. Whenever you run a marketing campaign, you always think about a target audience. When you’re planning a sale, think about who it is you want to participate in the promotion. Is it your current demographic? Maybe a new one you haven’t tapped into yet? Think about why you want to reach them also and how you’ll be able to utilize the customers that participate in the sale later down the line
Depending on your goal, a good strategy to employ is audience segmentation. You could do this based on activity on your site, previous purchases, marketing interaction etc. You can then give different segments a different offer as part of the same promotion and test the level of interest. Not only does it benefit you as a merchant, but it benefits your relationship with your customers as it means you can always send your customers a relevant discount.
Competitors
It’s important in any area of your business to look at what your competitors are doing, and this applies to discounting also. Pay attention to when your competitors have run promotions, what the promotion was, and what products were being promoted in conjunction. You can’t know how successful the promotion was because of course you don’t have access to their data, but you can see how well received it was on social media. Did it get much engagement? Was it active engagement - e.g. comments, tags, retweets - or passive - e.g. liking a post.
How you’re going to promote
The answer to this is going to largely depend on your goals and who you want to reach. Will you focus on social media, email, SMS, or a mix? Will you use paid advertising or is this an organic campaign?
Plan your resources
This is especially important during key sales periods like BFCM and Christmas. Think about all the different resources you’re going to need for each sales period like customer support, picking and packing, couriers and shipping, suppliers, product stock, etc. The last thing you need is to have a mega successful sale but not have the resources to cope with it!
Think about what you’ll do after the sale
Your strategy doesn’t just end when the promotion period ends, you should also have a post-sale plan for every promotion you run. Look at both store data and data from any social media or email activity you ran throughout the promotional period. How are you going to engage the new customers that your promotion has brought in? How are you going to remarket to the existing customers that participated? It’s important that a customer’s interaction with your brand doesn’t end once they click “Checkout”.
Codes vs Automatic discounts
We’ve given this its own section as this is one of the most important aspects to your plan for each sale, and there’s a lot to dive into! Which you use will depend on the goals, audience, and promotional plan for the sale.
Discount Code
This takes little explanation, a discount code is as it sounds - a single-use or multi-use code that can be entered at checkout to give a discount. That might be a discount side-wide or on a specific product or product line. You can distribute these through email, on social media, or on a site pop-up.
Pros:
- You can set it up so that there are only a certain number of codes available so you don’t run the risk of over discounting.
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Can be offered exclusively to different audiences, giving you more data to use afterwards to gauge the success of different promotions between audiences.
Cons:
- Adds an extra step to the checkout process that can cause friction for the customer. If the code isn’t entered correctly and they don’t realise, it might cause them to abandon the cart altogether.
- Can cause confusion for the customer on what is and isn’t included in a promotion.
- Codes are more likely to end up being shared on discount code websites.
Automatic Discount
An automatic discount is simply where the discount is applied already and displayed on the catalog, product, and basket pages. The customer doesn’t need a specific code to get the discount. You can set this on individual products, product lines, or site-wide. You can also set different discounts on different lines and products.
Pros:
- Easy and clear for the customer to see what they can and can’t get on promotion, and exactly how much an item will cost after the discount.
- Reduces friction for the customer when going to checkout as they don’t need to go off the page, find the code, and then enter it to get the discount.
Cons:
- Feels less exclusive than a discount code, and gives less opportunity for relationship building with customers.
- Reduces the sense of urgency around discounts, customers will remember if they have a discount code with a time limit but may be less likely to remember an automatic promotion.
The ideal discounting strategy should involve a mix of both codes and automatic discounts to give a balance of all the pros and cons for both. You can run some “secret sale” promotions with discount codes exclusive to loyal customers, automatic discounts during BFCM, etc. The type of promotion should align with the goals and audience you’re aiming for.
Keep in mind that Shopify only supports the use of one discount code at a time, so if you are using an automatic discount, customers will not be able to enter in an additional discount code.