For online retailers, the holiday season can be the most successful period of the year. However, it can also be the most stressful. With so much competition, it can be challenging to stand out and catch the attention of potential customers. While discounts are a popular tactic, they can also eat into your profits.
The number one concern for consumers is affordability. In a survey by Ernst & Young of 21,000 shoppers, 35% responded that affordability tops their list of deciding factors when choosing what to purchase.
Price-sensitive customers are forcing retailers to rely on promotions, a strategy that often results in heavy margin loss. In the past, customers who took advantage of sales would often end up increasing their cart by adding extra items. This is no longer the case.
Holiday shopping online provides limitless options for price-sensitive consumers to compare prices and leverage promos. This is pushing online retailers to rethink their promotional strategies. Many brands are adjusting to price sensitivity by increasing their number of discounts in order to acquire and convert shoppers. However, promotions can be a double-edged sword — boosting conversion rate at the cost of reduced revenue.
While discounts are a popular way to attract customers, they negatively impact the bottom line. Fortunately, there are strategies other than discounts and coupons that can be just as effective without eating into your profits. These tactics can help differentiate your business from the competition and create a more memorable holiday shopping experience for your customers.
Strategic approach to holiday promotions
Ecommerce has long looked at holiday promotions as an effective method of lifting sales. Because of this, reducing promos for some may seem counterintuitive. After all, wouldn’t fewer offers lead a drop in sales and revenue?
With the right strategy and technology, the answer is no.
Holiday promotions certainly have their benefits — from acquiring new customers to moving excess inventory. However, ecommerce needs to develop approaches outside of discounts and coupons for customer acquisition and conversion.
Here are 10 ways leading brands are cutting back on holiday discounts without missing out on sales.
1. Real-time actions
This advanced feature allows online retailers to tailor incentives on a session-by-session basis. When a shopper needs to be incentivized, a real-time action (e.g., single-use promo codes) can be triggered to influence that session before the visitor leaves the site.
Further, different incentives can be triggered based around purchase intent. This level of flexibility removes the guesswork out of promotions, empowering brands to suppress or deploy discounts based on data. Now, full-price shoppers can complete their checkout without a coupon while influenceable visitors can be nudged to convert via a real-time incentive.
Learn more about real-time actions here.
2. In-cart recommendations
What the customer has in their cart creates opportunities for brands to take further action — whether that’s free shipping for spending a threshold amount, ancillary products that the shopper may be interested in, or upgraded protection plans. In-cart recommendations are especially effective for full-price shoppers who can be influenced to increase their cart with ancillary products or services.
3. Dynamic pricing
Dynamic pricing can adjust a product’s cost based on demand and customer behavior. This encourages customers to pay full price by suppressing any offers on the product until it shrinks in demand. While effective, this strategy must be deployed carefully to make sure that shoppers do not see different prices at the same time.
4. Loyalty programs
Loyalty programs incentivize customers by rewarding them for their purchases with special offers (exclusive discounts, early access to new arrivals, free shipping, and more). This strategy promotes repeat visits and boosts brand affinity.
5. Bundle discounts
A product bundle takes slow-moving inventory and pairs it with more popular items. The two are then offered at a discount to incentive the shopper with a better deal than simply purchasing the popular item alone. More than a method of moving overstocked products, bundle discounts can increase your average order value (AOV).
6. Exclusive offers
Rather than showing sitewide promos, brands can limit discounts to just their first-time shoppers or valued members. This approach helps improve customer acquisition and brand loyalty by rewarding current and future brand ambassadors.
7. Time-sensitive offers
Single-use promo codes with time-bound exclusions allows online retailers to deploy lesser discounts that are enhanced with the power of urgency. These calls to buy now can drive sales even if the discount isn’t as good as the competition.
8. Great backstory
Everyone loves a good story. By showcasing the quality of your products, customers are more likely to pay full price as their attention shifts from affordability to overall value.
9. Information incentivazation
Discounts don’t have to be a one-way street. Rather than offering coupons to every consumer, encourage people who are buying to subscribe or give some personal info in exchange for a small incentive that will be less than the future repeat purchase/upsell.
Getting a visitor’s email alone is worth whatever discount a brand gives, as 50% of consumers make a purchase from email campaigns at least once per month and 59% of them say that marketing emails have influenced their buying decisions.
10. In-session marketing
In-session marketing is the most sophisticated solution for reducing holiday promotions without reducing conversions. Analyzing clickstream data to accurately identify visitor intent enables in-session marketing to predict what the visitor will do in that session and enable real-time actions.
What can in-session marketing predict? As a shopper navigates your site, artificial intelligence analyzes the visitor’s micro-behaviors and accurately identifies whether that person is online to buy, browse, or is on-the-fence.
Those who are likely or unlikely to make a purchase can be removed from seeing any discount. This frees up promo budget to be focused toward the on-the-fence shopper, otherwise known as the movable middle who can be influenced to purchase with a real-time nudge.
By implementing a holistic ecommerce promotion strategy this holiday season, you can boost your sales and reduce reliance on promos. Understanding your target audience, creating a sense of urgency, and leveraging customer reviews and testimonials can all help differentiate your business from the competition. Don’t forget to track and analyze the success of your promotional tactics to make data-driven decisions for future holiday seasons.
Ready to reduce promotions this holiday season? Schedule a demo with a Session AI expert.
