In the eCommerce business, from time to time there is a need where your business needs a "cash injection". One of the answers to the question "Where will the money come from?" is to liquidate your inventory.
Discount codes and promotions are like steroids for your advertising campaigns.
In today's article, I will describe the benefits of conducting a sale and why a SALE can accelerate the development of your business based on the knowledge I gained in practice by running an online store, which in recent years has increased its annual revenue from several hundred thousand zlotys to four million zlotys, and based on the knowledge acquired jointly with clients as a co-owner in the years 2020 - 2021 of the agency, which at the end of 2021 employed 30 eCommerce specialists.
Today I will tell you about:
- How the value of the discount code affects the purchasing decision.
- How can a discount code affect the decision regarding the selection of the assortment?
- How can a discount code increase the average cart value?
- How to communicate the discount code in the advertising campaign and on the website
- What budget should we consider in advertising campaigns during the promotional campaign and to which group should we direct the advertisements?
How does the value of the discount code affect purchasing decisions?
The percentage value of the discount code has a significant impact on the purchase decision. Based on my experience, I know that the 10% and 20% code does not have a significant impact on purchasing decisions and only lowers your margins on the product.
The table below shows you the research I conducted on a sample of a total advertising budget of PLN 97,000 and how my experience looks in numbers:
| A discount code | 0% | 10% | 20% | thirty% | 40% | 50% |
| Sample number of orders per day | 10 | 11 | 14 | thirty | 90 |
180 |
If your product margin does not allow you to organize sales greater than 30%, consider giving a discount.
A PLN 60 discount on orders over PLN 600 will work better on human psychology than a 10% discount on orders over PLN 600.
How can a discount code affect the decision regarding the selection of the assortment?
When organizing a sale, you can provide a discount code only for a selected group of products, e.g. "-40% on all men's shirts!" at the first-list price.
Remember:
- Information about the promotion must be clear and concern the selected assortment, which is easy to find on the website.
- Promotion information must be visible to every user. You can put information, for example, on the product card.
How can a discount code increase the average cart value?
AOV, or average order value, is the average order value. In the case of the fashion industry, the most common average order value statistically in online stores is a basket of PLN 250.
In this case, it is worth considering whether to use the so-called "up-selling" through a discount code active from the minimum order value, e.g. -30% from PLN 650.
Using such a discount code, we will extract the smallest orders and increase the average order value, therefore, by realizing 250,000. income with 1,000 orders and PLN 250 order value, you can complete 500,000. orders with the same number of orders and an average basket value of PLN 500.
How to communicate a discount code in an advertising campaign?
- Describe that the discount code is valid from ... to ...
- Add information that the discount code has been limited in quantity, e.g. to 500 items, and that you activate e.g. only 100 new discount codes in this pool per day.
- At the price in the product catalog, add the information XXX PLN -30% from "EXTRA30".
- Describe that the promotion is activated in the basket after entering the discount code
What budget should we take into account during the advertising campaign and to which audience should we target the advertising campaigns?
- The value for the customer in the form of a reduced price of a selected product or product ranges directly affects the return on the advertising campaign and, with a high discount value, can reduce the cost of obtaining an order even several times, therefore, for the period of promotion, you can increase advertising budgets so that the revenue generated in a given period of time is even bigger
- The advertising campaign will work best on a remarketing group to people who know your store, your product range and its prices. However, do not cross out the budget for acquiring new customers from your advertising campaigns. The promotion is a great time when you can gain new customers cheaper by selling the assortment that you have in stock and even if you do not earn on the order, you will increase the value of your online store by increasing the customer base.
