A 2020 overview on strategic pricing reduction tactics

In the ever-evolving world of online commerce, businesses are constantly seeking ways to attract and retain customers. A recent surge in online spending during Black Friday and Cyber Monday has highlighted the importance of strategic promotions.

On Black Friday, consumers spent a staggering $7.4 billion online, marking an increase of $1.2 billion from the previous year. This trend continued on Cyber Monday, with shoppers spending an unprecedented $9.4 billion, a 19.7% increase from the year before.

One promotional strategy that seems to minimise risk for businesses is the dollars-off promotion with a hurdle, such as $25 off a $150 purchase. By setting a hurdle, businesses can offer discounts without compromising their profit margins significantly. To maximise the lift on such promotions, companies should consider a tiered structure, for example, saving $25 on a $150 purchase, or saving $50 on a $200 purchase.

Free shipping offers have become a common cost in online business, largely due to the influence of Amazon Prime. However, creating a hurdle for free shipping should not exceed the average order size to ensure profitability. Companies should include promotional expenses for free shipping in their marketing budgets to avoid unexpected costs.

Friends and family offers, anniversary events, customer birthdays, reactivation of lapsed customers, prospecting offers, and specialty programs can also be effective promotional strategies. On the other hand, promotions like gift with purchase, purchase with purchase, buy one, get one, and two-fers are not as effective for marketing purposes.

A percentage discount without a hurdle is the most effective offer, with at least a 15% discount being recommended. However, it's important to note that 10% discounts can have a negative impact on the bottom line because the lift in response is not enough to offset the cost of the discount. Flat shipping rates, while having a lower lift in response compared to free shipping, can contribute to a healthy bottom line due to their predictable costs.

Sweepstakes can be an effective promotional strategy, but they must be on-brand and accessible to generate quality leads. A bounceback insert in outbound packages to customers is a must for promotions, as they provide the best names a retailer could find.

Crafting a promotional offer that appeals to customers while driving profit and loyalty requires attention to detail. By applying the insights from these listed promotional strategies, businesses can achieve the best of both worlds. However, it's worth noting that the search results do not provide information about who conducted the study on the success of these discount strategies in online businesses.

In conclusion, the success of promotional strategies in e-commerce is crucial for businesses looking to thrive in the digital marketplace. By understanding the impact of different promotions and tailoring them to their specific customer base, businesses can drive sales, build customer loyalty, and ultimately, boost their bottom line.