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Beacons by the name of discount codes, offering a discounted product or service. Not only are they enticing to customers, but they help increase your profit.

You might be thinking, “I’m a small indie business, I could use all the revenue I can get! Why would I want to lose money on a transaction?”

Turns out you gotta give a little to get a lot.

Let’s think long term here. If a customer is on the fence about one of your products, a slight discount could be just the thing to send them over the edge… in a good way! Because you offered them a deal, they bought your product and you have now started a relationship with them. These deals are a great way to encourage sales but more importantly, foster relationships, which means more sales in the long term.

Gartner statistics say that 80% of your company’s future revenue will come from just 20% of your existing customers.So if offering a few discounts now will secure your future revenue, wouldn’t you do it?

So while it might go against every self preserving instinct in your body to give things away for less profit, believe it or not, discount codes can be used as money makers in the long run, if you execute them right.

Let’s Get Specific

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Let’s Talk Strategy

Now that you’re convinced how great discount codes are, you need to know how to use them to increase revenue! So here’s how to use them to attract customers and sales…

Tips for Good Strategy:

  • Always protect your profit margin.  You want to create value, but you are running a business after all.
    • If you know 40% off will put you under, offer 10% instead.
  • Offer a variety of deals.  You may find that some deals work better for your business or for certain products, but no one discount code is inherently more effective than the others. Mix up your offers to keep customers on their toes. Predictability can get old.
  • Don’t seem desperate.  Offering too many deals will make customers wonder why you are trying so hard to get rid of your products…
    • 90% OFF ENTIRE STORE = desperate
  • Don’t always cut the price.  Another way to avoid looking desperate, by keeping the value of your product.
    • Offer free shipping instead!
  • Make the deal easy to understand.  People aren’t going to use your coupon if they are overwhelmed with too much fine print.
    • Put restrictions on the landing page
    • Avoid using “0” and “O” in the same code for less confusion
  • Don’t give away all your deals to just anybody!  Say thank you to your returning customers and keep them coming back.
    • “Get 25% the next time you order!”
    • Create personalized coupons, “Friends & Family Discount”
  • Be timely with your offers.  Make them relevant and competitive. As Christian Gordun, CEO and Founder of Coupon Craze explains, “nearly $16 billion was spent online in the first 36 days of the November-to-December holiday shopping season.”
    • Offer during holidays
    • Offer during major shopping times (Black Friday, Cyber Monday)

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(Ex: iZZi Gadgets had a 15% off promotion during the back-to-school season. Add custom text like this to your photos easily with phone apps.)
 
  • Create a sense of urgency.  Remind customers that they don’t want to miss out on a great deal.
    • Send reminders when a deal is about to expire, “Tomorrow is the last day to redeem your $10 off coupon!”

Get Couponing, and Get Sales!

They say there is nothing worse than standing behind a couponer at the grocery store. Good thing with these strategies, your coupons will be anything but inconvenient! You can now:

  • Attract new customers
  • Encourage repeat customers
  • Strengthen customer/affiliate relationships
  • Collect important sales data
  • Be competitive with other companies
  • Increase your long-term bottom line

It’s a game of give and take. Give a little now, and build stronger relationships for the long-term to get more sales. But before you start creating your own discount codes, decide what you want your profit margin to be and offer deals accordingly. Offer what is valuable to your customers but still reasonable for your business.

Now you’re ready to start couponing!

Related Post: 6 Steps to Turn First-Time Purchasers Into Repeat Customers

 

Rachel Daley
Rachel is the resident Content Fairy at MadeFreshly, the ecommerce platform that makes your passion pay off. Click here to get her actionable tips and inspiration for entrepreneurs every week!