The Value of a Discount
The ability to offer discounts to your customers can be an integral part of a retail pricing strategy. Offering a potential customer the opportunity to save money is a proven way to capture their attention. As consumers prefer to buy products that are on sale, discounts serve as a way to attract more people into your store. Discounts are not only beneficial to your customers, but they also offer great benefits to your business as well. Technology is changing more rapidly than ever before, and having sophisticated secure discounting logic can help you preserve millions of margin dollars and maintain a competitive advantage.
In the Mind of Your Consumer
- 83% of shoppers prefer in-store promotions
- 81% of shoppers like steep discounts
- 55% of shoppers like personalized offers
Insight for Your Discounting Strategy
- Holiday Purchases- 73% of holiday purchases are influenced by discounts and coupons. (Deloitte)
- Holiday Shoppers- 72% of holiday shoppers plan to take advantage of free shipping offers this season. (Deloitte)
- BOGO Promotions- 93% of consumers revealed that they’ve taken advantage of BOGO promotions in the past year. (AMG Strategic Advisors)
- Email Discounts- Most consumers check their email for discounts at home either in the morning (31%) or evening (32%). (Yes Lifecycle Marketing)
- Purchasing Decision- 89% of consumers named price as a top factor affecting their purchasing decisions. (Hawk Incentives)
- Specific Consumer Groups- 64% of retailers will offer exclusive promotions to specific customer groups like students, seniors, and military members. (SheerID)
Technology for Discounting
Ensuring your business has sophisticated and secure discounting logic across your Point of Sale solution will help maintain margins and provide consistency across all of your sales. Retailers can choose if they want to calculate discounts off of their standard selling price, suggested retail price, subtotal, or net total based on their goals.
Using a daily discount scheduler, a managerial tool that applies discounts automatically can ensure consistency in using discounts throughout the day or week. It also avoids human error by helping sales personnel to apply discounts properly, which in turn speeds up the POS process.
Discount settings give retailers the flexibility to outline their discount rules. Retailers can build discounts by single or multiple products, or specific categories or groups. Using Discount Settings allows retailers to successfully execute intricate promotional and pricing tactics. Companies can also configure discount control parameters that are specific to their business needs. Having persistent discounting logic within your software promotes confidence in a retailer’s ability to accurately price sales directly from the start.
Retailers are able to preserve margin dollars with heightened levels of rule configuration. Advanced line item discounting provides a breakdown of each discount at the individual line or subtotal. This process makes it extremely user-friendly for the sales personnel working in your POS application every day. Discount hierarchy configuration provides the order of operations rules that apply discounts in a manner that consistently provide the best deal to your customer. Discount Timetables allow retailers to give a start and end date to a specific promotion.
With refined discounting logic, retailers can determine how many discounts can be applied to a specific sale, how to discount items that are on promotion, the order in which discounts are applied to a sale, and rounding of discounted values. In addition, retailers can build pre-defined kits to offer controlled pricing to a specific group of related items.
Types of Discounts
Percentage-Based Discount- This is the most popular way to offer discounts including small incentive percentages or larger amounts off to either drive sales or sell slow moving merchandise.
Dollar Value Discount- A fixed dollar amount that retailers apply to their products. Psychologically, the perceived value can feel like a better deal to consumers and is easier to calculate than percentages.
Free Shipping- The concept of free shipping or delivery is a powerful strategy. Consumers overvalue “free” and feel as if they are choosing the most convenient option. Free shipping or delivery can also improve conversion rates, boosting your average order value.
BOGO Buy One, Get One Free or at a Percentage Of- When purchasing an item associated with this discount, consumers receive a second item free or at a percentage off. It can be used to clean out inventory or when the gross margin is high enough to generate sufficient profit.
Minimum Purchase Quantity- Reward consumers with a high average ticket with incentives after passing a revenue threshold, further increasing your sales.
Seasonal Discounts- Seasonal discounts can help shed out of date inventory as well as reward customers who purchase during off-peak times. This can help retailers increase their sales at the beginning of a new season.
Advantages of Offering Discounts
With increased traffic, retailers can forecast increased sales. Major furniture sales events are known to draw in new customers and allow retailers to promote new merchandise. Holidays such as such Black Friday, President’s Day and Labor Day, are a great time of the year to promote sales on all different types of merchandise.
Free Up Space
Discounting products that have been sitting in your store or warehouse for a long period of time will allow you to sell them more easily and make room for new products. As each season brings new styles, seasonal sales are great events to clear out your slower moving products as well.
Offering discounts or coupons to certain groups of people, such as senior citizens, military personnel or people having financial troubles shows you are making an effort to help people. With these types of offers, your business can gain recognition as a socially responsible organization.
Most businesses have weekly, monthly, quarterly or yearly sales goals. If your business is falling short, offering discounts can help boost sales to reach those goals.
Gaining the Tools Necessary to Succeed…
“A main factor in our software decision was that we needed to find a company that had the ability to handle our unique discounting structure. In the past, we were calculating discounts on pen and paper and STORIS has eliminated this hindrance, removed room for error and made selling easier than ever. As a result, our gross margin rose significantly due to their discounting capabilities.”