What are the best practices for setting discount rates and periods?

1 Know your goals and metrics

Before you launch any discount campaign, you need to have a clear idea of what you want to achieve and how you will measure your results. Do you want to increase revenue, volume, or market share? Do you want to acquire new customers, retain existing ones, or encourage repeat purchases? Do you want to move specific products, categories, or seasons? Depending on your goals, you will need to track different metrics, such as sales, profit, conversion, retention, or customer lifetime value.

2 Choose the right discount strategy

There are many types of discounts you can offer, such as percentage off, dollar off, buy one get one free, free shipping, loyalty rewards, or coupons. Each one has its own advantages and disadvantages, depending on your product, target market, and competitive landscape.

For example, percentage off discounts are easy to understand and apply, but they can also lower your perceived value and quality. Dollar off discounts can create a sense of urgency and savings, but they can also reduce your profit margin. You need to choose the discount strategy that best suits your goals, products, and customers.

5 Evaluate and learn from your discounts

After you have run your discount campaign, you need to evaluate its performance and learn from its outcomes. You need to compare your actual results with your expected goals and metrics, and analyze the factors that contributed to your success or failure. Make sure you collect feedback from your customers and competitors, and identify the strengths and weaknesses of your discount strategy. Use these insights to improve your future discount campaigns and avoid common pitfalls.