Editorial
The Gist
- Maximize revenue through strategic discounting. Use dollar-off vs. percentage-off offers, and cater to full-price shoppers to avoid unnecessary margin loss during holiday campaigns.
- Utilize unique discount codes. Protect margins by sending unique discount codes to loyal customers, preventing scraping by discount code sites.
- Optimize cart abandonment strategies. Don’t offer discounts too quickly for abandoned carts—try alternative solutions to win back sales without sacrificing margins.
Discount messaging is a staple of holiday messaging. In fact, 56% of the subject lines used by retail and ecommerce brands for their 2023 holiday email campaigns mentioned discount amounts, according to Oracle Digital Experience Agency research. And, of course, many more campaigns featured discounts without mentioning them in their subject lines.
But just because discounts are highly anticipated by consumers during the holidays doesn’t mean brands have to give away margin needlessly. Here are four tactics that help you clawback unnecessary discount dollars.
1. Exploring Dollar-Off vs. Percentage-Off Offers
In our holiday subject line research, we found that percentage-off discounts were used at more than twice the rate of dollar-off discounts. However, we also found that dollar-off discounts drove significantly higher clickthrough rates.
That’s not only a sign that there’s an opportunity for brands to offer discounts in a form that’s more appealing to their customers, but it’s also a potential margin opportunity. That’s because consumers don’t always value the more lucrative discount at a higher level.
For example, consumers might convert at a higher rate when offered $10 off a purchase of at least $50 than when offered 20% off purchases of at least $50, despite the fact that the latter is worth the same or more in every instance. Some might say that people aren’t great at math, but it’s truer to say that people like a simple deal. And especially during the holiday season, simple wins.
Related Article: Seasonal Email Strategies: Stand out on Black Friday & Cyber Monday
2. Not Highlighting Discounted Products to Full-Price Shoppers
Some people don’t like discounts, especially deep discounts. They view discounted products as inferior or out of date. They think, "The brand wants to get rid of this product so much that they’re willing to cut the price. It must not be very good." Conversely, they see full-price items as more valuable and desirable—or even more unique, since fewer people are likely to buy it.
Use segmentation and personalization to cater to these full-price shoppers, which obviously ring up higher-margin sales. Highlight non-discounted products and consider using an alternative subject line that focuses on lifestyle, emotional, quality, exclusivity and other issues.
Of course, should they have a change of heart, these subscribers can find the on-sale products on your site anytime they want, but you’re spotlighting the products they’ve demonstrated they’re more interested in.
Related Article: Messaging During Recessions: 3 Opportunities for Marketers
3. Sending Unique Discount Codes
Discount codes can be a double-edged sword. They reward your loyal subscribers, but they also get scraped by discount code sites like RetailMeNot, which erodes your margins and also undermines the value proposition of opting in to receive your promotional emails, texts and push messages.
Unique discount codes solve this problem. They put discounts only into the hands of the people you want, and also allow for much more accurate margin forecasts.
Related Article: How to Prioritize Email Personalization's Perennially Moving Target
4. Not Giving Discounts Automatically in Cart Abandonment Campaigns
Abandoning shopping carts is a natural part of the shopping process. Sometimes people are exploring alternatives, conferring with a partner, interrupted or simply don’t have time to complete their transaction just yet.
For all of those reasons and more, cart abandonment isn’t actually a problem to solve … unless the subscriber doesn’t return to their cart within a reasonable amount of time (determined by the average rate of return for your customers). It’s only then that a cart abandonment campaign is warranted.
Reconsidering Automatic Discounts for Cart Abandonment
If you’re automatically offering a discount in these messages, you’re probably giving away margin needlessly — in addition to training your subscribers to always delay their purchases and abandon their carts so they can get a discount. As an alternative, consider simply reminding subscribers that they left something in their cart and what it is. That’s a great first cart abandonment message because it addresses people who just got busy or needed more time to consider their purchase.
Related Article: What's Your Digital Customer Experience Strategy for Out-of-Stock Products?
Alternative Tactics for Recovering Abandoned Carts
If the value of the cart is substantial, you might then follow up a few days later with a second message that presents alternative products based on what they abandoned. This addresses those people who abandoned because they were uncertain about the product itself. Or you could highlight financing options to address people with financial objections.
You’d be surprised at just how effective non-discount cart abandonment campaigns can be. That said, if you’ve already trained your subscribers that you’ll give them discounts anytime they abandon their carts, it can take a while to undo the damage.
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Discounts are a key part of the holiday season for most brands, but that doesn’t mean that every interaction must be discount-driven. It also doesn’t mean that you should give away more margin than is necessary to accomplish your goals.
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