Yariv Dror is the CEO of StoreYa.com.
Discounts job.
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Everyone loves them.
Customers feel like they saved money, m erchants increase their sales. Everyone is happy.
Want quantitative evidence? Four months since our Coupon Pop marketing tool was launched, it is already responsible for 20 percent of sales of our merchants. Merchants collect emails, fans and followers, customers are more engaged with shops and 2.5x visiting more pages, while seeking what to use on their coupon and sales rise.
But we are not the focus today. The focus is on you, and how you can maximize the discount you give your customers.
Companies are always curious when it comes to coupons: What is the sweet spot for reductions? Does a reduction in higher yields more sales
Rationally? - Yes! One might think that customers like the discounts, so the more the better right
Actually? - No! Thank you to Prof. Dan Ariely and studies, we know that people are not always rational, and now, thanks to the comprehensive analysis of these data, we can see exactly where reductions become ineffective.
So how do you optimize reductions to boost your sales?
Background
Using statistics Pop Coupon our tool, we examined the behavior of 10 million customers over a period of one month to see how they reacted to different discount rates.
These are the categories we checked:
are the countries we checked:
We grouped the visitors and sales based on the percentage of the savings offered by our merchants.
We then divided the sales made by each group by the number of visitors exposed to the promotion of each group; filtering in an extreme values to ensure that none of the big sellers, those making $ 40,000 to $ 80,000 per week through our tool, distort the data collected from the other SMB.
We sought to find what is the most effective discount percentage - that is, what percentage has the best ratio of visitors to sales? To find this, we counted the number of sales by 1000 visitors.
The reduction sweet spot
Although a 10 percent reduction had a better ratio of visitors to sales of 5 percent when the discount obtained all the more effectively ratio worsened. Instead of increasing as expected, the ratio of visitors to sales decreased , ie the bigger the discount, the higher sales by visitors were .
As is evident in the graph below, a reduction of 10 percent is the tipping point - giving a greater reduction gives a lower sales
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Why? Teacher. Ariely can probably explain this by saying that customers appreciate a product unless we give a discount, or they perceive that the merchant is still a significant margin and is therefore able to offer a significant discount. Anyway, we did not test the reasons and the psychology behind the conclusions we have reached, but we did conduct a comprehensive analysis to achieve them.
Since these results have taken us by surprise, we were skeptical. We wanted to ensure that nothing thrown off our conclusions.
So we plunged again into Excel to see if the percentage of discount ideal changed as product prices. The bottom line is this:
- Products up to $ 100 :. 10 percent is indeed the sweet spot
- products between $ 101 to $ 200 :. The sweet spot moves slightly to 15 percent - but do not go more than that
- above Products $ 201 : The sweet spot actually moves down. Merchants should be content with a reduction of 5 percent. Although 10 percent takes you beyond the tipping point.
So go ahead, check the price category of your products fall in and test the discount rate on your own store next time you run a promotion . We want to hear your results. Please share any questions or comments below