To prevent your store from being taken seriously and your conversion rate from being negatively affected, you should be careful with coupons and discounts. To understand what this all means and how it can affect your store, listen to this episode of the Conversion Hacker Podcast.
Stay tuned until the end, where Jörg Dennis Krüger gives you a little tip for your online store that might help you.
TRANSCRIPTION OF THIS EPISODE OF THE PODCAST
Hello, my name is Jörg Dennis Krüger, and as my fishmonger at reception said:
Yes, I am the conversion hacker.
And today it's all about discounts.
There are so many discount offers, 5 percent, 10 percent, 30 percent, 50 percent. A newsletter here, a voucher there. Register here on the website and get 10 percent off your order now. Discounts sell. Discounts are always good!
Well, let's really get to the point. Discounts are one of those things. Discounts help to sell, that's for sure. But discounts also have certain problems, especially if you educate your customers to discount.
I once had a customer who always sent out a newsletter every month with a 10 percent discount code. And what was the result? The regular customers naturally always waited for this newsletter with the discount code.
I see the same thing in my own behavior. There's a wonderful online store that sells balsamic vinegars and liqueurs and things like that, and they regularly have really big discounts of around 30 percent. And of course I never order there at the normal price, I always wait until the email comes with the discounts and then I order at the discounted price.
Especially with these products, you don't need them all the time, they last a little longer, so you can always order a little more when the discount arrives. What does that mean for the store? For the store, it means that it gradually educates its customers to simply buy with discounts.
And that's a big problem, because the margins are generally not that big. We invest a lot of money in advertising to acquire customers. And if it's all about discounts because we're the cheapest store and so on, then we might be able to grow. But you have to see whether it's profitable, perhaps with the second or third purchase, when the customers really do come back.
But ultimately we are addressing a target group that is only interested in the price. Of course we can use discounts. To generate new customers in particular, you can of course try to go out with a discount, but you have to be very, very careful so that customers don't just come for the discount.
But that's only part of the problem, a bigger part of the problem is that discounts can simply look dubious. Unfortunately, we are particularly familiar with this from many dropshipping stores, where products are offered at incredibly high discounts.
And with physical products, high discounts are simply quite unrealistic, because they have to be produced, they have to be stored, they have to be packaged, they have to be shipped again and so on. To then offer a 70 percent discount or something like that is already a sign that the store is dubious in some way.
With services, it's perhaps a different story. I mean, you basically only have time that you might sell. You can nudge things back and forth a little and sometimes offer something cheaper. But when it comes to products and especially if you want to sell a lot of them, such high discounts are quite problematic.
And so we are now attacking the topic of discounts from both sides. On the one hand, we don't want to educate our customers to always want to use discounts. On the other hand, we shouldn't use so many discounts because they can also have a negative impact on the conversion rate because the trust simply isn't there.
And so we really have to make sure that we use discounts intelligently. I've just said that you can come to the site and see that you get 10 percent off your first order if you leave your e-mail address. It's a wonderful thing, you should definitely do it or at least give it a try, because of course it appeals to a target group that is interested in the products. They come to my store and I offer a small discount, like 5 or 10 percent or free shipping on the first order, and I collect an e-mail address.
Of course, customers can also take advantage of this. At C&A, for example, just as I ordered a lot of clothes for the children, I must have had 20 or 30 e-mail addresses at some point because I got a new 10 percent voucher for every order. Because I thought, why not? You have to be a bit careful. But unless you're C&A, H&M, ZARA or Amazon or something like that, people aren't necessarily looking to get discount vouchers all the time.
(There are no discount vouchers at Amazon, that was just an example)
In any case, things like this are good. To generate email addresses, because that closes the circle and I can then use the discount to buy the email address and send it to the customer regularly. You also have to see how good the quality is. But if you make it nice on the site, then the quality is usually not that easy and you get the customers to buy.
After all, normally around 30 percent of users who come to the site buy the voucher first, but perhaps 3 or 4 percent or less do. In this respect, it's a relatively good thing. If you have the email address, then you can also remind people that they still have a voucher that is about to expire and so on, so that you can get them to make their first purchase.
Then I already have the e-mail address anyway, so I know who my customer is. The best thing to do is to get a "double opt-in" at the time of purchase so that I can then continue to send the customers properly. Because then, of course, I can turn the first buyer, who has made a discounted purchase, into a second, third or fourth buyer.
Of course, I should also have products that customers want to buy regularly. This is when the discounts pay off the most. Of course, you can also get customers with a discount for products that are bought rarely or only once. But you have to assume that the discount will be redeemed to a greater or lesser extent by all customers.
However, discount codes should really only be available in the store or perhaps with influencers or blog partners or similar and not be used as an affiliate instrument (loyalty instrument). Because we don't want customers to go googling for store name voucher and then end up with umpteen affiliate partners, and then we have a double problem. Then we not only give the discount with the voucher, but we also pay the affiliate partner and then they also get another 20 percent.
Because then we have a 10 percent voucher, 20 percent of the affiliate partner 30 percent commission. That's simply too much. So, we shouldn't use vouchers at all. Affiliates really have to bring us traffic and not just grab it from users who have already made a purchase.
So, that's how we can do it, don't use vouchers regularly, use vouchers as an absolute special story. And distribute vouchers for new customers, so that new customers become customers in the first place. Of course, they have to be configured in such a way that they can only be redeemed for new customers. If possible, they should also be individual so that you can really manage them properly, but you can also use a general voucher code that only applies to new customers.
And then we have a regular stream here, a regular flow of new customers who come to the store, and then we can write to them accordingly.
And a little tip at the end about what you can do with voucher codes: You can simply write your customers an apology email so that they don't get used to voucher codes. "Sorry, the server was down for an hour and you may not have been able to order. We're terribly sorry about that. Here's your 10 percent code, but it's only valid for three days and is an exception because we're apologizing to you now." And there are even more ideas on how to do this. But you can also use it to boost sales without more or less training your customers to use voucher codes more often.
So much from me for today, please leave five stars on Spotify, iTunes and wherever else. Feel free to write me a few comments on the blog at JDK.de/podcast, and of course follow me on social media under Jörg Dennis Krüger on Facebook, Instagram and so on.
I look forward to seeing you next time, and I hope you look forward to the next time too, and see you then. Yours, Jörg Dennis Krüger!