Don't train your customers to only buy from your store with discounts

To prevent your shop from being taken seriously and your conversion rate being negatively affected, you should be careful with vouchers and discounts. To understand what this all means and what it can look like for your shop, listen to this episode of the Conversion Hacker Podcast.

Stay tuned until the end, where Jörg Dennis Krüger will give you a little tip for your online shop that may be able to help you.

TRANSCRIPTION OF THIS EPISODE OF THE PODCAST

Hello, my name is Jörg Dennis Krüger, and as my fish seller at reception said:

Yes, I am the Conversion Hacker. 

And today we're talking about discounts.

There are so many discount offers, 5 percent, 10 percent, 30 percent, 50 percent. Here a newsletter, there a voucher. Register here on the website and get 10 percent off your order now. You sell with discounts. Discounts are always good!

Well, let's really get to the point. Discounts are a thing. Discounts definitely help you sell. But discounts simply have certain problems, especially if you educate your customers about discounts.

I once had a customer who always sent out a newsletter every month with a 10 percent discount code. And what was the result? Of course, the regular customers have always been waiting for this newsletter with the discount code. 

I see the same thing in my behavior. There's a wonderful online shop that sells balsamic vinegars and liqueurs and things like that, and they regularly have really big discounts, around 30 percent. And of course I never order at the normal price, but 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 shop? For the shop, this means that it educates its customers little by little so that customers simply shop 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 everything is just about discounts because we are the cheapest shop, etc., then we might be able to grow with that. But we'll have to see whether it's profitable, perhaps with the second or third purchase, when the customers actually come back. 

But ultimately we are addressing a target group that is only interested in price. Of course we can use discounts. In order to generate new customers, you can of course try to offer a discount, but you have to be very, very careful so that customers don't just come because of the discount. 

But that's only part of the problem, a bigger part of the problem is that discounts can also simply seem dubious. Unfortunately, we know this from many dropshipping shops in particular, where products are offered with incredibly high discounts. 

And for physical products, high discounts are simply unrealistic because they have to be produced, they have to be stored, they have to be packaged, they then have to be sent again and so on. Giving a 70 percent discount or something like that is a sign that the shop is dubious in some way. 

Services may be different. I mean, you basically only have time that you might sell. You can push back and forth a little and offer something cheaper. But when it comes to products and especially if you want to sell a lot of them, then such high discounts are quite problematic. 

And so let's attack the topic of discounts from both sides. On the one hand, we don't want to train our customers to always want to take advantage of 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 very intelligently. I just said it, come to the site and see that you get 10 percent off your first order if you leave your email address there. Wonderful thing, you should definitely do it or at least try it out, because you will of course appeal to a target group that is interested in the products. They come to my shop and I offer a small discount, like 5 or 10 percent or free shipping on the first order, and I use it to collect an email address. 

Of course, customers can also take advantage of this. For example, at C&A, just as I ordered a lot of clothes for the children, at some point I probably had 20 or 30 email addresses because I got a new 10 percent voucher for every order. Because I mean, why not? You have to be a little careful there. But unless you're C&A, H&M, ZARA, or Amazon or something like that, then 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 that are good. In order to generate email addresses accordingly, because the circle closes, I can then use the discount to buy the email address and then send it to the customer regularly. You also have to look at how good the quality is. But if you do it nicely on the site, the quality is usually not that easy and you then get customers to buy it. 

Because once you secure the voucher, usually 30 percent of the users who come to the site buy it, but maybe 3 or 4 percent do, or less. In that respect it is a relatively good thing. If you have the email address, 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 email address so I know who my customer is. The best thing to do is to get a “double opt-in” when purchasing so that I can then continue to send customers properly. Because then I can of course turn the first buyer, who bought at a discount, into two, three or four buyers. 

Of course, I should also have products that customers want to buy from regularly. This is when the discounts pay off the most. Of course, you can also get customers for products that are bought rarely or once with a discount. But you have to assume to a certain extent that the discount will be redeemed more or less by all customers. 

However, discount codes should really only be available in the shop or perhaps with influencers or blog partners or similar and not be used as an affiliate instrument (binding instrument). Because we don't want customers to go out and google shop name vouchers 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 get another 20 percent.

Because then we have a 10 percent voucher, 20 percent of the affiliate partner and 30 percent provi. That's just too much. So, we should leave vouchers altogether. Affiliates have to really bring us traffic and not just grab users who were already buying. 

So, that's how we can do it, not use vouchers regularly, use vouchers as an absolute special story. And distribute vouchers for new customers so that new customers then become customers in the first place. Of course, they have to be configured so that they can only be redeemed for new customers. If possible, they should be individual so that you can really manage it properly, but you can also have 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 shop, 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 is your 10 percent code, but it is only valid for three days and is an exception because we are now apologizing to you.” And there are even more ideas on how you can do something like that. But with this you can increase sales without having to train your customers more or less that voucher codes come more often. 

That's it from me for today, please leave five stars on Spotify, iTunes and wherever. Feel free to write me a few comments in 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 next time too, and see you then. Yours, Jörg Dennis Krüger!

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