INCREASE ECOMMERCE SALES

Coupons are destroying your Shopify brand

by Mike··4 min read

Stop me if you've heard this one before.

You have some merchandise in your fulfillment center that just can't seem to sell.

The seasons are starting to change, your new stock is about to come in and you're starting to get worried that your old stock will end up taking up room, or worst, turning into dead inventory you have to write off.

What do you do?

You login to your Shopify account, and start creating coupons and discounts. You then send those coupon codes to your existing customers, pop them up in banners on your site, let people know on your instagram, all in the hopes that people react and buy your merchandise.

At Batch we have seen time and time again, merchants chasing the perfect coupon strategy which leads to more headaches down the line.

While coupons may seem like the best way to sell your product, it can backfire in some very unexpected ways.

Your customers will expect coupons from now on

The minute your customers realize that you're playing the coupon game, they will try to win. Customers will:

  1. add to their cart without checking out in the hopes of you mailing them a coupon
  2. only buy when things are on discount
  3. not appreciate your product and business and will be less likely to refer it to their social network.

You discount more than you need!

You want to move some merchandise, so you create a coupon for 35% and send it out to your email list.

A product you normally charge $100.00 for flies off the shelf because it is only $65 right now. That means, on every product you sold, you lost out on a minimum potential of $35.

Multiply that by the amount of products you just sold, and well, you get the picture and it's not a pretty one.

Now, what if I told you you could have sold the exact same amount of volume, but instead of discounting $35 you would have had to only discount $20, or even $15.

The trouble with markdowns is that you're making a blanket statement about what the cost of products ought to be in order to more effectively drive conversions... when the truth is that every customer is different, and that virtue means that every customer has a different selling price that will knock them over the edge.

This is exactly the problem Batch helps you solve. We empower your customers to put in a fair price, and allow you as the merchant to decide whether you are comfortable selling at the price requested or not.

You don't have to guess how much you want to discount by—let each customer tell you and cherry-pick the best offers on that basis. This is known as the "pay what you want" model, but taken a further step..

Your profitability shrinks

If you sell your products for less money, well you end up, with less money.

Although on the unit economic level it may look like an OK situation, the matter of fact is, that revenue loss has to be made up somewhere.

This means that moving forward you will have to recoup that revenue with extra marketing efforts, pricing your new items higher, running more ads... Basically, coupons now = more work later. It's a vicious cycle you can never make up for as increasing prices is usually a worse move than every other option at your disposal.

By adopting a "pay what you want" model, you'll open yourself up to more options by the fact that you'll be in control of the degree at which you are willing to markdown different products.

You can be flexible with your markdown strategy where in times of need you might be more aggressive, whereas hot seasons might call for more rigidity in the range of offered prices you might be willing to accept.

You attract customers who don't care about your product

Email is one of the quintessential elements of effective Ecommerce marketing.

You get the emails of your loyal customers who love your product, you send them an update when you have new product come in, and BAM, the sales come flooding in and you're rolling in dough.

However, if the only way you sell is with coupons, you'll end up with the emails of people who ONLY buy with coupons. These are customers who will not respond to your new products, or care about your latest drops. They will only wait for coupons, and will not respect your brand.

The function of coupons is to create a large shift in the mind of your customers related to price. It's a way of quickly breaking through any previous shopping objections to create a conversion.

Today, your customers have become privy to ecommerce tricks. They expect discounts to appear in their inbox after abandoning their checkout. Instead of bombarding your customers with discount codes, consider how surgically striking each customer with the perfect discount is likely to product a more beneficial and profitable outcome for your store.

Let your customers tell you what they want to pay, build that relationship with them and maximize your profits.

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Mike

CTO at Batch

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