Marketing Advice


Is it wise to give discount codes as part of your marketing?


Have you ever caught yourself questioning whether offering discount codes will boost your business or whether it will leave you worse off? Well, Colin Sinclair McDermott, aka The Online Print Coach delves into the pros and cons of discounting, and delivers tips on how to offer discounts effectively.


T


his is something I was very guilty of when I ran my own printing company.


Offering discounts can be an effective way to introduce quick sales from existing customers or attract new ones. There are however some pros and cons in doing so and it’s important to consider these carefully before deciding if this approach is working for your business or doing more harm.


Pros of offering discounts 1) As I mentioned, it can attract new customers who might not have considered ordering their garments from you. It can also encourage existing customers to perhaps buy from you more frequently possibly with new products they hadn’t considered buying before.


2) They could also build customer loyalty as customers often feel more appreciated and valued when they are given a special offer. In turn, this can lead to repeat business, positive reviews, and maybe even referrals.


3) I’ve yet to meet a garment decoration business that doesn’t have excess stock taking up space in storage. Offering discounts to get rid of excess stock, free up space, and also allow you to focus more on products that are in higher demand.


4) Discounts can often be the differentiating factor in winning or losing work due to the competitive nature of our industry and allow us to stay competitive.


| 20 | November 2024


Cons of offering discounts 1) It can really impact your profit margins. If you’re offering discounts that are too large or indeed offering them too frequently, making a decent profit is going to be tough. I’ll always guide people towards overall gross profits of 65% with an overall net profit of 20%. If you’re not achieving this or tracking towards this, perhaps you need a different approach.


2) One thing you can run the risk of in our industry is giving the perception of lower quality goods. Some customers may think that due to the cheaper price, they are also going to get a more inferior product. I’ve seen firsthand how this can actually result in a decline in sales or have a negative impact on a brand’s image.


3) In addition to the worry of perceived lower quality, you also need to be mindful that always offering discounts can lead to customers assuming that your products are simply not worth paying the full price.


4) This in turn can lead to discount dependence and you end up having a customer base that is solely reliant on discounts.


Some of my tips for offering discounts


As I am sure many of my clients will confirm, I’m personally not a huge fan of discounting but I do believe they have their time and place. If you do decide to go down this road, here are some tips that can help you do so effectively.


1) Set clear goals before offering discounts so that there is a clear understanding of what you want to achieve. Are you looking to achieve a specific sales target, build customer loyalty, or as I mentioned, clear some excess stock? Doing so will help determine the types of discounts that are most appropriate.


2) Make sure you know your numbers. It’s important to know your profit margins so you can determine how much you can afford to offer and consider things like the impact on cash flow.


3) Consider offering targeted discounts rather than just a one-size-fits-all approach. Target discounts to specific groups such as new customers, repeat customers, customers who have dropped off, or customers who have abandoned their shopping cart if you sell online.


4) Put a limit on the frequency and duration of your discounts. That will help with the perceived value of your products.


I was extremely bad at this in the early days of running my printing business. It seriously affected my margins and in essence was operating like a busy fool for not enough return.


I hope reading this article will cause you to think twice about how you go about running promotions in the future. It’s better to think about that perceived value, consider up-selling or cross-selling similar items, and maybe create bundles to drive sales up without harming your bottom line so much.


www.printwearandpromotion.co.uk


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