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Discounts are not a win-win. Customers may be drawn in and business may boom, but it’s very short lived. The conversions come at high costs and retention is basically non-existent. eCommerce has been democratized by discount giants like eBay and Amazon. Consumers are increasingly comparison shopping, even while they are instore.

no discounts

How can you combat this discount addiction that is plaguing consumers? Implement a loyalty program to drive acquisition, conversion and retention in one swoop. Loyalty programs train customers to make purchases, not expect discounts. This keeps acquisition costs low while keeping conversion rates high.

1. Acquire shoppers without the mark-downs
Instead of giving a discount to first-time shoppers, incentivize shoppers to sign up for loyalty for a bonus number of points. Reduce acquisition costs for by using resources you already have – your shoppers. Incentivize shoppers with rewards or points for their valuable referrals. Reward shoppers for sharing with friends each time they make a purchase, find a product their friend might like, signup for a newsletter or any other purchase driving behavior. Like minded social circles ensures high quality traffic.

2. Convert shoppers with rewards
Instead of getting customers to check out with an additional discount, show them how many points they can get with their purchase. Once visitors are on your site, increase conversion rates by having clear CTAs for valuable actions. Entice visitors to join the loyalty program by having a CTA on product pages. For example, “purchase this product for X number of points” or “add this to your cart for this branded perk.”  Loyalty members are more likely to make purchases for rewards.

3. Keep retention high with exclusive offers
Instead of having a blowout sale to get customers making a repeat purchase, remind shoppers how many points they are away from their next reward. Keep customers coming back with reminders and limited time offers. Target customers who haven’t visited in awhile with emailed reminders of their current rewards or with special events for double points or exclusive offers.

Reward shoppers for making purchases, not for discounts. Loyalty programs help eCommerce businesses keep costs low and still reward shoppers for their loyalty.

 

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  1. avatar
    Corey Savage
    on March 26, 2014 at 7:28 pm

    What consumers like about a discount is that it’s immediate. It can take time to earn enough rewards points, which is a downfall of that type of program. If you use a points program, it shouldn’t be too difficult to actually receive a reward.

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