How to Discount in Retail: Tips for Running Sales Without Killing Your Profits

1. Define your objectives

Blindly implementing discounts is one of the biggest mistakes you can make as a retailer. Before running a sale or offering a hot new promo, see to it that you have a clearly defined purpose for doing so.Are you doing it because you want to gain new customers or are you looking to engage existing ones? Do you want to lure in people who haven’t bought from you in a while? Are you looking to get rid of excess stock? These are just some of the questions you should answer when crafting your offers.

2. Segment shoppers and tailor offers accordingly

Creating discounts or offers based on different customers’ preferences or purchase histories can greatly increase conversions. Take the time to segment your customer base so you can market and sell to them accordingly.One way of doing this is to set up customer profiles. Create profiles outlining the price sensitivity and shopping habits of different customers and use them as tools to determine the kinds of discounts to offer each shopper type.

3. Make sure the timing is right

When it comes to discounts and offers, timing can be just as important as relevance. Sending out deals at just the right time (i.e. when customers need them) will greatly increase your conversion rates.This is why you also have to pay attention to when shoppers are buying from you. For instance, if you have a lot of customers who buy at the end of the month, then schedule your offers around that time.

4. Be mindful of your margins

To ensure that you don’t give away too much or end up losing money with your discounts, set an “acceptable range of margin” for your products. That’s what Spreadshirt, a global platform for personalized clothing and accessories does when they implement discounts.

5. Implement psychological pricing

Another way to offer deals without giving away too much or hurting your brand is to implement creative pricing and discount strategies.A great example of a brand that did this is eyewear merchant Rivet & Sway. Rather than simply putting items on sale, the company implemented a pricing strategy wherein shoppers could purchase eyewear at $169, but were incentivized to buy additional pairs for $99.

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