Offer Discounts without Losing on your Profits
Discounts are always an attractive way to increase sales and entice the customer. Many rebate strategies work wonders if they are supported by a strong service and distribution channel. But if a company consistently lowers the price point there is a possibility that it can eat into profits.
When small businesses want to increase their sales figures further, a discount is one of their first approaches. Here are some tips that can make your rebate strategy in retail work without cutting your profits or damaging your brand image.
1. Define your Goal
- Keep yourself and the team focused on the discount strategy fixed. The indiscriminate waiver will not solve the objective. Weigh the pros and cons and cut your costs to such an extent that you will remain profitable.
- If the objective is to get new customers then you can adopt a strategy of huge discounts on your retail channels which increases footfall
- If you’re looking to re-engage with customers who have purchased products from you before, then maybe look for some customized offers or offers on products that get bought more
2. Get a Competitive Advantage
- If you want to differentiate customers from your competitors, go for a discount strategy that will be lower than your competitor’s price, but will keep you profitable.
- In this case, when the customer compares your product with the competitor there is still a difference of less than Rs 300.
- If the customer notices that your pricing is always low, perhaps after a few trials they will start coming straight to your retail outlet and buy instead of comparing
3. Make Customers feel Positive
- Sometimes even a small discount or gift coupon makes customers happy about your purchase. They are positive about your brand.
- This will help you in the long run because the customer will add you as a brand that takes care of them
4. Timing should be Right
- Sending discounts at the right time ie when customers need them this will greatly increase your conversion rates. This is how a discount strategy works wonders in retail
- For example, if you have lost customers visiting the first 10 days of the month then plan your discount strategy around that time
5. Keep a Check on your Margins
- Compare the sales you need to make to your current margin, how many sales are needed at a discounted margin to achieve your target revenue. Marketing activity can then be increased proportionally
- Many companies have also set an ‘acceptable margin of margin’ unless you aim for aggressive customer acquisition to keep you a retail rebate strategy within an acceptable range of margin.
6. Promote Sale of New Products as well Impulse Buying
- Since you have placed the item at a huge discount, the people visiting the store will shop impulse as well. This discount strategy in retail will help sell other products as well.
- Give product recommendations to your customers and suggest upgrades that can help drive your sales indirectly
- Organize your products in such a way that new products are kept in front of the store while they are discounted. The customer will have no choice but to go through the new launch and note them. There are chances that he can take an item here for testing
7. Give Discounts with Conditions
Do not offer blanket discounts, make sure you have certain pre-requisites that the customer must meet before qualifying for the discount.
Try different methods of relaxation such as:
- Buy a certain quantity
- Spend a certain amount
- Special discounts for loyalty program customers
- Buy 2 and get 1 free
- Bundled discounts (2 or 3 items in the same category, for example, a face wash, and a cream)
These conditions do not allow discounts to eat into your profits and maintain healthy sales.
8. Offer Heavy Discounts to get rid of Old Products
- This strategy works for products or businesses that are usually seasonal. For example, if you run a clothing boutique, you can get rid of your summer collection by offering huge discounts and you need to display clothes for the next season.
- It can also be used for electronic items such as mobile phones, especially when a new product of the same series is being launched. To get rid of too much of the existing model list, heavy discounts can be used.
- This discounting strategy helps to get rid of stocks at least at the base price and instead of eliminating them
A discount strategy in retail can be a great tool for acquiring new customers, also engaging with your old customers and disposing of old inventories which are the strategy that really needs to work. Calculate how much discount you can give otherwise you have no choice but to walk away from your profit.