As a small business owner, you may be reluctant to offer discounts, thinking they will eat into your profits. That's true in some cases, but generally, discounting has more advantages than drawbacks. If used right, this promotional tactic can boost sales, increase order value, and drive brand loyalty.
Let's assume you use a website builder to create and manage eCommerce stores for your clients. A website builder costs significantly less than hiring a developer, but you still hesitate to offer discounts on your services, fearing that consumers may undervalue them.
However, the right kind of discount delivered at the right moment can actually elevate perceived value, not diminish it. Strategic discounting creates a sense of urgency and exclusivity, turning “lurkers” into buyers. It’s also an effective way to re-engage inactive customers and reduce abandoned carts.
Still on the fence about it? Here’s why, when, and how to offer discounts to grow your revenue.
Most consumers won't pay for a product or service unless it's discounted. In one survey, 67% of millennials and 66% of Gen Zers said they would wait for special deals before buying. Similarly, 44% of Gen Xers admitted to waiting for lower prices.
This marketing strategy dates back to 1887, when Coca-Cola offered coupons redeemable for a free glass of soda. At the time, the brand was relatively unknown. By giving people a chance to try its product for free, it acquired millions of customers and later became a household name.
Today, companies use this tactic to grow their reach, drive repeat business, and increase sales. Discount marketing also allows them to:
According to recent research, sales discounts encourage impulse shopping and can enhance the customer experience.
For instance, a consumer looking to buy a console table may postpone the decision because they don't see it as an essential purchase. But if you launch a limited-time offer—say, 10% off with free shipping—the purchase suddenly feels more justified.
In the above scenario, the discount creates a sense of urgency and boosts perceived value, turning a "maybe later" into a "buy now." At the same time, it delights the customer, making them feel like they got a great deal.
Discount marketing can also increase brand loyalty. In a 2024 survey, half of consumers said they prefer discount coupons as part of a loyalty or reward program. This was the second most popular option after cashback rewards, outranking free items or product trials, loyalty points, and other incentives.
Offering random discounts won't get you anywhere. The key is to tie your discounts to clear goals like boosting average order value or re-engaging dormant customers, and use them as part of a marketing strategy.
Also, it's important not to overuse this tactic. Repetitive discounts can lower the perceived value of your products or services, leading shoppers to believe it's not worth paying the full price.
That said, here are five discounting strategies that can pay off big.
Offer your website visitors a discount in exchange for their email address. This could be something like, "Thank you for checking us out. Sign up for our weekly newsletter to get 20% off your first order."
Similarly, you can reward new customers with a discount on their first purchase. The goal is to give them a reason to act now or come back later while laying the foundation for a lasting relationship.
Most brands offer 10-15% off, but you might achieve better results by increasing the discount rate. According to research published in the Journal of Retailing, discounts lower than 19% tend to decrease overall spending rather than boost it.
With that in mind, consider giving new customers at least 20% off their first purchase to encourage conversions. Just make sure your profit margins can sustain the discount.
Retaining existing customers costs less than acquiring new ones. That's reason enough to reward loyal buyers with exclusive discounts, personalized offers, or freebies.
For instance, you could implement a tiered loyalty program where customers unlock discounts every time they make a purchase, accumulate points, or reach spending thresholds. This strategy encourages repeat business, strengthens brand loyalty, and drives engagement.
Another option is to reward existing customers with birthday discounts or offers tailored to their preferences. Depending on your business model, you could also run members-only promotions to create a sense of exclusivity and boost sales without devaluing your brand.
Looking to increase average order value? Consider offering discounts on purchases above a certain threshold. With this approach, you can incentivize customers to buy more products or higher-value items.
Alternatively, create complementary product bundles and sell them at a reduced price. For example, customers who purchase an LCD monitor, keyboard, and mouse would pay 15% less than if they bought each item separately.
On a similar note, you can bundle related services, such as content writing and keyword research, and offer them at a discounted rate.
When a customer abandons their cart, send them an automated email featuring a discount or special offer. An example would be, "You forgot something in your cart. Get them for 10% off within the next 24 hours." Personalize your email with the buyer's name and high-quality pictures of the product they wanted to buy.
Another strategy is to offer an abandoned cart discount before the customer has left your site. If you go this route, use an exit pop-up to introduce your offer and persuade shoppers to place their orders.
Buy one, get one free (BOGO) promotions can help you increase sales volume, especially for low- to mid-priced goods, consumables, or seasonal products like:
These offers create a sense of urgency, encouraging customers to stock up or try new products. They also work for service businesses, helping them secure bookings in the off-season or during slow periods.
For example, you could sell two T-shirts for the price of one or six massages for the price of five. Set a time limit on your offer to get customers to act fast.
Depending on your goals, you could also offer volume discounts, pre-launch discounts, referral discounts, free shipping, or other special deals. If, say, you want to grow your email list, provide a discount to customers who sign up for your newsletter.
One aspect to be aware of is that not all discounts are created equal. Some work better for certain products and target audiences than others, so you'll need to experiment with different approaches. For instance, BOGO deals are suitable for everyday essentials, while limited-time percentage discounts might be more effective for high-ticket items.
Align your offer with the type of product and the stage your customer is in, whether they’re discovering your brand, placing their first order, or coming back for more. For even better results, time your discounts strategically to maximize their impact.