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

Coupons and discounts are used by businesses as they draw customers in and encourage them to shop with them instead of the competition. However, applying coupons or discounts often or in the wrong way, will eventually reduce profit.

JC Penney used to run the appearance of a permanent sale. The customers loved knowing that they got a good bargain. However, since the shop was offering nonstop discounts, shoppers came to expect it. When the business changed course and started offering selective discounts, customers revolted. The company still hasn't fully recovered from the fallout.

It is important to note that couponing and discounts need an amount of money.

If you're a proprietor of a shop As a store owner, you're looking to attract customers, but you don't want to sacrifice profits, especially over the long run.

Here are 8 ways to use coupons and discounts without losing excessive profits.

1. Inspire a purchase from customers you have not previously met.

When you rethink the purpose of coupons for new customers, it becomes clear that it's a lead generation tool. The point of the coupon isn't making just one sale. The goal is to gain a client so you can sell to them again.

The question is how to motivate a second purchase?

A good way to do this is by giving customers a coupon for a second time after the purchase to reward for becoming a new customer. Make this coupon either a lower amount, or even require a larger amount of money to purchase it. For instance "spend at least $100 and get 20% off."

Another method to encourage a second purchase is to get your customer to sign up to your mailing list to begin emailing and texting them. By using email, you will be able to inform the customer of your other products and services, how you solve the problems they face, the ways you can bring joy to your customers, as well as any other advantages you provide. This can all be accomplished with no discounts whatsoever. Be on the lookout for them, and they'll be more likely to buy again.

MailPoet provides the entire set of tools needed to build a welcome mailer sequence that will allow you to begin the customer follow-up and nurture process.

2. Use tiered coupons instead of percentages

In the previous tip we covered the method that offers discounts of 20% for spending $100 or over. Consider the benefits the discount scheme can bring to you. What will most customers do? You'll have to spend more money in order to receive discounts.

You can use a similar approach to give tied coupons but with no percentages. For example:

• Pay $40, and you'll get $10 back
• Make $100, and you'll earn $20 in return
• Pay $250, and you'll receive $50 back

Using that type of structure you will notice that the amount a customer gets back is a flat amount, regardless of whether they pay more than the minimum.

A customer, for instance, spending $50 gets $10 back which means you get $40. But if a customer spends around $80 the customer will will receive $10, which means you earn $70. In the event that their total cost ends up anywhere above $80, they can attempt to bring it over $100 so they can be rewarded with a $20 refund instead. In either case, you earn more cash.

With a fixed percent discount your margins remain identical regardless of the amount they spend. If they spend $100 and then receive 20 percent off, that's an amount of $80. If they buy $200, 20% off will now be $40.

Flat dollar discounts works better for you, because it increases an average size order without raising the discount at the same percentage.

3. Use a loyalty program

Although loyalty programs might not be the best fit for every firm, they're an effective in creating long-term income. In the end, there are some who love them and keep coming returning to see their rewards increase!

It also allows you to keep in touch with them over 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 them.

4. Create a subscription or membership

Discounts are a great way to increase sales when you convert them into regular income. If you're able to develop a profitable subscription model to your organization almost any discount can be financially justifiable.

Let's take an example. Say there's a monthly subscription for $19 option. If you can demonstrate that your subscribers will be subscribed for at minimum six months in total, that's $114 in recurring revenue. Would you offer a $25 discount coupon, if that someone signed up to your program and earned the average of $114 revenue? How about the initial month that costs only 99 cents?

To get people to sign up for your membership, you could give away prizes and even bigger discounts. This is because you'll get cash back on the purchase, and more. The idea is to win them over with a big rewardand continue by offering value to ensure they will stay loyal for a long time.

Another approach is to offer discounts on membership itself. It could be that everyone who makes a purchase of more than $100 will receive 20% off their subscription. The savings are still worth it thanks to eventual recurring revenue.

5. Use product bundling discounts

If you bundle your products, you compete less on cost and instead focus on the convenience you're providing customers. Bundles are fun to play with when you bundle them properly.

You could offer 20% off the bundle of products that provides an excellent deal to the customer and still provides better profits for you. Why? Your order's average is higher, and your shipping and packaging costs will be lower than if were to sell each item separately.

6. Incentivize referrals

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

If you have the most faithful customers, offer them another reason to inform your friends about you. Offer them coupons to distribute to friends, and if their friends use them to redeem coupons, your customer will also be rewarded.

This is a smart way to coupon because it wins a new customer you wouldn't normally have reached. Additionally, the existing customers turn into brand ambassadors.

It is possible to send coupons such as these via postal mail, or text message. It is also possible to link to a page on your website that has coupons to new customers, and request for them to forward the link to their contacts.

7. Upsells on offer

It's also the best thing about it. does not feel as if you're threatening the customer, as you're offering exactly the same item they've previously purchased -- just more of it.

You can offer other options for upselling, such as upselling your subscription service. When you're making use of coupons and discounts, you can use upsells to provide a way to make back any profits lost on the very same purchase. Also, if the product you're offering upsells is connected in any way to the products customers are already purchasing and buying, it's an appropriate choice as well, and some may be willing to take it up.

8. Have a reason for the sale

We are all the way back to our JC Penney story. There was no reason for their permanent sale price. So, customers came to anticipate and sometimes even demanded their prices.

One way to prevent this is to run sales when you have an incentive to do it. There are many ways to do this. As long as you can justify the price you are charging, even your most loyal customers will agree and not expect it in the future.

Utilizing coupons and discount codes by this method increases customer loyalty , and also attracts new customers however it does not tie you in with any long-term expectations of discounts.

Reasons for a sale can be found anyplace:

• Celebrating a local sports team taking home a trophy
• Thanking customers for X years in business
• There is a lot of stuff must be cleared
• The holidays
• New customer discounts
• Planning to donate a portion of sales to charity
• Taking advantage of a story in the news which you can connect to your own business

Smart discounts and coupons boost long-term profits

All these ideas serve all have the same aim in that they help thread the needle between attracting new customers while not giving away too much profit or creating price-obsessed customers.

You want loyal customers, repeat buyers, and recurring revenue. Using coupons and discounts in ways that produce any or all of those are usually the best choice.

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