To offer discounts is an effective appoach to generate more sales. It is a well known strategy and it is popular amongst retailers. Lowering prices can bring you sales but it can also damage your reputation. You need to make the sales the right way. It is a good thing to get a clear view about pros and cons about offering discounts.
What is exactly a sales discount strategy?
Retail discounts are offered to generate more sales through selling more units for a certain given time. Some retail stores offer whole store-wide discounts to make space for a new collection of goods. Just like the winter sales with discounts to make money with the goods that were left in the stocks of the store. Big time retailers sell in large quantities their products for a low price to generate more sales in a certain time-frame.
Why do retailers offer discounts to customers?
To bring new customers it is a good thing to offer discounts. Also to sell large amounts of products at a lower risk. Let’s be honest we all know that lower prices make the customers happy and offering discounts bring more happy customers to your store. To increase brand loyalty you can attract new and existing customers to your store to buy from you by giving discounts.
To drive sales and to improve cashflow.
The retailers offer discounts with coupons to drive more sales quickly and improve their cashflow. When customers come to your store they feel like that they are getting a good deal and spend money without planning. Even when customers have a budget they are willing to spend couple of extra dollars. To attract new customers it is a good way give customers discounts. Lower prices will bring new curious customers to try your products for a lower price. If they are satisfied they will buy more from you even for the regular price.
To generate large amount of sales.
Your goal is to generate profits this can be done by giving discounts for a certain time-frame and to increase brand loyalty. Selling large amount at a time can bring you in more money. If you have a reliable plan and communicate with your customers to make them bond with your brand. This will get past customers to buy from you. You can encourage them to visit your business again get to know your new products. Existing customers feel special when they are offered discounts through loyalty programs. You can offer existing customers tailor-made solutions to continue to buy from you.
To make space for new products and get rid of old ones.
Giving discounts can make your old collection of products sell quicker and this way you can make space for a new collection. If your clothing store had collection of the summer left over. You can get rid off those by selling those goods at a discount price. This way you can make space for your new items that will sell in the fall. Some customers feel sometimes when they buy your products or services constantly that value is going down. Offering high prices to maintain a status can bring more customers from a higher segment.
Do not run discounts too often.
Offering discounts too often can bring your profit margin down. This means you have to sell lots of units to meet the break-even-point. To keep your brand exclusief you need to offer a certain value for your goods. The thing with discounts is that the prices go down and you will have to catch up in due time. The cashflow is going down and profits will get low.
Offer discounts to new customers.
You can attract new customers by giving small discounts. Offering special offers to attract new customers to your store will generate more sales. You can give discounts to ealy adopters. You can build a loyalty program who are willing to buy from you. You can generate sales through pre-orders. Also offering time limited discounts can bring you new customers. Implement personalized offers to attract new customers.
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