I know I’m not alone when it comes to being thrilled when I find a great deal. Good deals are enticing because even if you’re not looking for a deal, you can be blindsided when you stumble upon one. Suddenly that something you didn’t previously want or need is a necessity. Simply because it’s a bargain.
Smart store owners and marketers know this. So you can join this elite group, let’s give you some pointers on how you can lure customers as well.
Know Your Margins
Here’s the thing, you want to be able to give your customers awesome deals, but you don’t want to do it at too much of an expense to yourself. This is where knowing your margins comes in.
Obviously, putting a 15% discount on a product you only have a 10% margin on is not fiscally responsible. However, putting a 25% discount on a product you have a 50% markup on is a pretty good deal. For both you and the customer. You still make money, and your customer saves money. The bonus? Your customer is happy, and happy customers return.
In line with the example above, what sort of products do you sell that typically have a wider profit margin? Often times these products are your add-on products.
For example, if your store sells shoes, you may sell different accessories like shoe horns, leather protector, or different shoe care items. And at times, these items have a higher markup. A higher markup means you can give a better discount without it hurting too much.
Or how about something that isn’t truly an add-on product, but products you could naturally bundle together. Let’s go back to shoes and suppose your store sells men’s clothing. If that’s what you sell, you would know that a man’s shoes and belt should match in color and even leather texture, assuming he is wearing a suit. This may even be information you could include on a product page.
If you had a higher profit margin on the belt, you could offer it at a discount when someone bought shoes. You may win in a few ways. Perhaps your customer didn’t know the shoes/belt rule, but now you’ve educated him and given him a great deal.
He goes away spending more than he originally planned, but he’s happy about it. And you’re happy because though you discounted an item, you still come out ahead. It’s a win-win for all.
The strategy of a loss leader is time tested. You can actually promote a loss leader or chose to do a deal on a low margin instead of a loss.
You can win big with this strategy, especially if the item is reasonably popular. If you’re selling an item significantly cheaper than anyone else, you attract business. And this is true whether you’re doing the promo at a loss or just at a lower margin.
Remember, we want our customers to think they scored. Have you ever heard people bragging because they managed to get product X cheaper than their friends got it? It often goes something like this, “I paid way less than that! I got a better deal than you”, So yes if your objective is for your customers to think they scored, you won.
Note that a happy customer is also going to provide you with the best kind of advertising, because the friend’s immediate response is, “Where?”
You don’t have to call this a daily deal since this means your customers are going to be expecting you to run some sort of sale every day. If you can manage that, go for it. If not, go for weekly deals.
Perhaps choose a day of the week and run your deal then. This will also train your customers to check in on that day because they’re not going to want to miss out on a sweet deal.
Not up to the commitment of a daily or weekly sale? No problem. You just have some sort of random big sale and call it done.
Personally? I like the idea of training your customers with a weekly deal. And I think it would be relatively easy for you to work that into your marketing pipeline.
And remember, this doesn’t need to be a loss leader item. You can choose something you still make a little money on, it’s up to you. Your objective is to get buyers into your store and their eyes on your other awesome merchandise.
I’m going to inject a bit of my own personal customer perspective here. And this customer is a little anal when it comes to words. I’m always leery of clearance sales if the store owner doesn’t clearly indicate why they’re clearing out the item. Why do they need to get rid of it at this amazingly reduced price? What’s wrong with it?
With that in mind, a well done and clearly advertised clearance sale can be a huge success, especially if you wrap some FOMO—fear of missing out—around it. Now people will be running to your store to get your clearance items before someone else.
What are some ways you could do this throughout the year? I’m fortunate enough to live somewhere where there are 4 distinct seasons. At least that’s what they tell us. We’re actually dealing with 2 for the most part, and I’m extremely sick of 1 of them. But I digress.
If your store sells seasonal items of any kind, you already have several times a year where you can clear items out. Say it’s the end of winter—finally—and you have some stock left on something that sold well and steady throughout the season.
It’s time to turn your seasonal promotion strategy into an end-of-season promotion. Add a FOMO hook and give it even more power. This can work very well for you, but remember, in this case, it’s not about you. Well, it’s always about you, but if—in a way—you put your customer first, you still come out as the winner. Give them a few sweet deals during the year, and they will keep coming back for more.
You could even have a clearance section in your store. Create a category for it.
If it was an item that was popular and is definitely gone for good, then you have an excellent opportunity for FOMO. Make it clear that not only are your remaining quantities limited, this is also the last chance to get them.
Perhaps your store sells electronics that are updated yearly. New model TVs, smartphones and an array of other products are released every year. There are people that must get the new model every year, and people that wait for that one special one they had their eye on
Since my carrier clearly understands the idea of FOMO and clearance sales, they heavily advertise that quantities are limited. Once they are gone, they are gone, as the new models are arriving on their warehouse shelves.
They clear out old merchandise and still make money. I feel like I’ve scored.