Discounts are the fastest way to get more orders.

But they come with a bitter aftertaste: lower revenue and reduced margins.

Discounts are usually meant to create urgency and move customers to act. But they are by far not the only option you have. In this article, we present 7 alternatives that help you drive sales while protecting your valuable profit.

1. Free gift with every purchase (GWP)

The great thing about a GWP is that the perceived value will almost always be higher than your actual cost. This difference is your margin advantage.

Instead of giving a customer 20% off an order of €100, you can give them an additional free product with a retail price of €20 that may cost you only €5 to buy. You have then saved €15 in margin compared with the voucher.

Another advantage of this approach is that your customer gets to know more products from you. You can also include small trial sizes and samples as GWPs. This significantly increases the probability of repeat purchases if the GWP or sample is liked.

Tips for GWPs:

  • If you do not have inexpensive items that you can add as GWPs, consider adding a product to your range specifically for this purpose. You can position the new product at a higher price in your shop, which further increases its perceived value as a gift.

  • You can also include add-on products that increase the benefit of your main product. For example, if you sell soap in refill packs, you can include a reusable soap dispenser as the free product.

  • Think about whether your GWP can create an additional customer touchpoint. For merchants who also have a flagship store or branches, for example, the GWP can also be a service.

2. Store credit, also known as cash back

With store credit, or cash back in modern terms, you can initiate repeat purchases very effectively.

Instead of giving a customer a discount on their current purchase, you can give them the equivalent as credit in the store. This initially costs you nothing and only costs something when customers return to use their credit for another purchase.

With cash back, it often makes sense to use a higher amount than with a classic voucher because it makes the first purchase more attractive, meaning higher conversion rate and higher basket value, and also makes the second purchase more likely because the customer does not want the credit to expire.

Many brands implement store credit through points, for example, but you can just as easily note the euro amount as credit for the customer.

To further increase the success of cash-back promotions, the cash back should be time-limited.

3. Exclusive or limited products or experiences

This approach is especially effective around holidays or special promotions such as Black Friday. The goal is to win your customers’ attention and bring them to your site. To do that, you need to offer them something special.

A time-limited special edition of your bestseller or a completely new but limited product makes customers want to buy. Usually at full prices and margins. FOMO, fear of missing out, is your best friend here.

Big bonus point: many of your customers will not only buy the exclusive product specifically, but also browse your site and buy additional products. With well-executed promotions, you can drive sales without any discount at all.

McDonald’s has perfected this strategy. With regularly recurring but time-limited burgers, customers are repeatedly activated and brought back. Anyone in the mood for a McRösti or McRib?

4. Bundles / volume discounts

We are personally big fans of tiered incentives. You can give higher incentives when your customer spends more money. Bundles are probably the most tested and proven sales tactic for increasing contribution margin and AOV, average order value. Bundles often have only a low acceptance rate, but every purchase is a huge win in terms of margin.

5. Guarantees, upgrades and extras

Money-back guarantee, express shipping, service upgrades, gift wrapping, …

Upgrades and extras are great ways to increase the perceived value of a purchase. In some cases, they do not even cost you more.

Some examples:

  • Especially shortly before holidays or toward the end of promotions, it is often cheaper to include express shipping than to grant a price discount.

  • Products that are especially suitable as gifts can be wrapped as gifts for free during the promotion period.

  • Money-back and satisfaction guarantees cost nothing at first and can significantly increase conversion rates, assuming your product keeps its promise.

Price is not always the purchase barrier. Sometimes it is time, convenience or security. Use these moments to sell at full margins.

6. Info products

Info products have initial costs, usually for copy, video editing, designs and a lot of concept work. But once your product is finished, you have almost unlimited upsell opportunities without additional costs.

With high-quality info products, you can significantly increase the value for your customers. A cookbook with recipes that use your products. A guide to changing food for pets. Training plans and exercises for supplement customers. Used skillfully, info products increase customer retention and are a great time-based sales instrument.

7. Good cause / charity

Today, customers increasingly expect companies not only to be profit-driven but also to actively support social causes.

Brands that consistently integrate this into their brand core gain a significant competitive advantage in many industries. Customers are more loyal to these brands and are even willing to pay more for their products or services. Supporting good causes can be integrated excellently into marketing and advertising measures and often opens up new communication channels, such as PR.

Companies can pursue this approach effectively by automatically donating part of the proceeds from every sale to a good cause. The additional costs this creates for your company can often be added to your prices in full or in part. Because of your positioning, your brand is perceived as higher value, and your customers are willing to pay the higher price. Since customers regularly pay the full price here, habituation to constant discounts is avoided.

But BE CAREFUL: for this approach to work, you and your company must be authentic and support a cause that matters both to your target audience and to you and your employees.

A brilliant example is STRAYZ, which supports stray dogs and cats with every product sold. That is a perfect fit for its customers. If the company instead merely planted a tree for every purchase, that would also be commendable, but it would not have the same positive effect on customer perception.

Remember …

…it is not about generating as much gross revenue as possible in the short term while ruining yourself in the long term. Especially with your most valuable customers, you do not want to waste contribution margin to encourage a repeat purchase that would have happened anyway. You also do not want to condition your customers to always wait for the next promotion.

It is about offering the right incentive to the right person at the right time. To do that, you should direct different offers to different groups. You should bring out the big discounts only when a customer becomes inactive or churns.

Always think about contribution margin, not revenue. Be creative, segment your customers, think around the corner and do not simply define a percentage for your voucher.