Before we talk about ecommerce, we have to address the elephant in the room: Amazon.
From being the leader in direct to consumer sales, Amazon is now even in the call center software space thanks to its newest addition, Amazon Connect.
This heavyweight ecommerce brand accounts for nearly 50% of all online shopping purchases. Not only that, but Amazon has over 100 million Amazon Prime members.Many brands find it incredibly difficult to compete with their low prices and free, two-day shipping. Difficult, yes. But impossible? Not at all.
One of the most powerful ways to compete with the commerce giant is through discounts, which are effective on their own. Pair them with strategic PPC ads, and you’ve got a winner.
You might think that giving discounts is often associated with undervaluing your offering. If products are worth it, customers are willing to pay—but that’s not the case. The truth is that discounts can be an incredibly powerful form of advertising.
Now, I’m going to tell you why—and I’m going to share six of the most effective discounts you can promote in your PPC campaigns so that you can start using discounts to drive sales. Let’s get started.
Two psychological aspects contribute to the effectiveness of discounts. First, discounts create a sense of urgency (a form of social proof) because most discounts are time-sensitive.
The FOMO is powerful and can drive people to make purchases they have been debating for a while. (This is part of the reason why President’s Day and Labor Day sales do so well.)
Some discounts work better than others. Even the same discount with different wording can be more effective.
For example, many people respond more favorably to discounts that use the word “Save $X” versus “$X Off.” While the final cost saved might be the same, saving indicates avoidance of a loss, while a certain amount off indicates a benefit.
This is the second psychological aspect of discounts at play.
People tend to respond more strongly to loss aversion. Sounds fancy, but what does it mean? As humans, we are more drawn to things that, for example, help us avoid pain rather than things we like.
So, you might avoid going parachuting to prevent the experience of a broken leg, even though you might enjoy the experience. (Assuming you didn’t break a leg, of course.)
The drive to avoid a loss is, in most cases, more powerful than any benefit we might receive.
Let’s say you’re comparing airline credit cards like the ones below:
You might love that the Gold Delta SkyMiles card gives 40,000 bonus miles and a $50 credit. But then you notice the $95 annual fee after the first year, so you avoid that card and opt for one without the fee.
Here’s another example: Say you really love swimming in the ocean. In fact, you do it at least twice a week.
One day, you get stung by a giant jellyfish during your swim and, as a result, the thought of going in the water horrifies you.
Even though you’ve swum for years without being stung, that one experience stops you in your tracks. The possibility of getting stung (the loss) is more powerful than the joy you get from swimming (the benefit.)
That is loss aversion, and it is powerful whether the perceived loss is money or a jellyfish sting.
Now that you understand the psychological reasons why people love discounts, which ones are the most effective to use in PPC ads? Here are six insanely effective PPC discounts to test out on your audience.
Increasing the amount each customer spends is one of the simplest ways to increase your bottom line.
Think about it this way: The sales numbers are the same whether 20 customers spend $10 or four customers spend $50, but your PPC costs are far lower to obtain four customers versus 20, right?
In addition, X amount off $50 orders encourages people to meet the minimum spend, which leads to spending more time on site.
There’s also a good chance they will spend more than the $50 required if they spend more time browsing, so including a “Buy More, Save More” component with 30% off orders over $100 increases average order value (AOV).
The business side benefits are clear enough, but why does this work from the customer angle? Take a look at this coupon by Carter’s, a children’s clothing brand.
Carter’s actually combines its 20% off $50 with free shipping, which is even more enticing.
Plus, the mention of other discounts and clearance makes customers feel like they can get a really good deal.
Shoppers are going to work really hard to meet that $50. If the customer is just a few dollars away from $50, that last item is basically free, right?
Housecall Pro, an online software system for home service companies, like plumbers and electricians, uses a 33% discount, which is more eye-catching than a flat 25% or 30% off.
Play around with the numbers to see what rate customers respond to, but don’t go below 15% or the deal will lose its value. If margins are tight, offer a flat amount off, like $5, instead of 10%.
Black Friday, and more recently, Cyber Monday, has been the most popular sales day for several years now. However, ecommerce is taking over a larger portion of the Black Friday sales pie, with ecommerce sales increasing 16.7% in 2018, while brick and mortar sales dipped.
But, don’t expect to get away with 20% off on Black Friday. Customers expect deep discounts, so consider offering 40% off or even higher.
You can also try using uneven numbers, which are more likely to catch the eye. Check out this ad from Old Navy.
Instead of relying on the price drop signals like above, use language like “Save 40%,” which triggers the loss aversion mentioned at the beginning of this article.
The best deals are the ones where everyone wins. Seasonal changes are the perfect time to get rid of excess inventory while offering customers a great deal.
Take Macy’s, for example, which hosted a clearance/blowout sale at the end of the summer to get rid of their summer inventory to make room for fall and winter styles.
For deep discounts, it is important to make the most of the attention and traffic generated by the sale.
For example, ask to add new customers to an email blast or tease new products in order to encourage a relationship, rather than a one-time purchase.
FOMO is compelling, which is why short-lived sales for retail holidays like Presidents Day, the 4th of July, and Labor Day are so popular.
We don’t want to risk missing out on a good deal!
Vineyard Vines, a popular casual clothing brand, made the most out of the recent President’s Day sales by offering 30% off select styles.
Ecommerce brands could get even more mileage out of retail holiday discounts by using some of the other popular discounts listed above, such as a certain amount off of $50 purchase or free shipping.
Which discount sounds more powerful: 10% off your first year or a free 30-day trial? Most of us would pick the free trial because it sounds like it’s worth more.
For example, if a customer is comparing the different types of password managers, they might be overwhelmed by the options. Which one is the best? It’s a subscription service, so what if they try it and don’t like it?
A free trial call to action, like the one Manage Engine offers, can reduce option overload and encourage users to make a purchase by alleviating risk.
Once the customer has signed up and begun using the password manager, they are unlikely to want to switch (as long as the product is decent of course!) because it would require a lot of work.
While the cost of shipping is often just a few dollars, it is one of the most powerful discounts you can offer. In fact, one survey found that shipping costs triggered 52% of shopping cart abandonment.
Free shipping is so powerful, it has even sparked memes. Like this one:
When it comes to PPC ads, free shipping is especially powerful for standing out against big competitors.
Amazon offers free shipping for most purchases, so not offering free shipping (even if your product is slightly more expensive) helps level the playing field.
Pretty Litter, which offers a cat litter that changes color to indicate health issues, uses free shipping in their Google ads.
This is a powerful differentiator, especially against far bigger ecommerce brands, like Tidy Cats, Chewey.com, and Walmart.
Free shipping can also be powerful on social media ads, with notoriously high costs per click.
Pretty Litter, for example, uses free shipping as part of their video ad. They actually double down on the discounts by offering both 20% off as well.
The bottome line here? In order to compete with Amazon, you need to offer free shipping. recommend starting with free shipping on orders over $50.
Don’t listen to those who insist “discounts will kill your business”! When used strategically, discounts can super-charge your PPC campaign by helping brands stand out against large competitors like Amazon and Walmart. Start with the discounts suggested here, but don’t forget to A/B test to see which discounts resonate with your customers!
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