In e-Commerce, there are many ways to provide internet marketing incentives to consumers by discounting products, shipping costs, order values etc and they are all good but we can do better.  Most discount campaigns are site wide and pushed to all visitors but this spray and pray tactic is not optimal.   Instead why not target your discounts to the right audiences?  Remember you want to increase conversions but at the same time try your best to manage/maintain those margins.

So don’t waste discounts on those that don’t need them and don’t show discounts to those that they won’t help convert:

1. It makes sense to show different types of discounts to different types of users
2. It does not make sense to show visitors discounts that they cannot take advantage of
3. Your website real estate is premium property, why waste valuable webpage space on the wrong discount message?

Let me explain with the following market segmentation examples:

New Visitors v. Returning Customers

For new visitors the main objective is to get them to make that first transaction.  So you offer a juicy ‘20% off anything’ discount to entice visitors to buy which is great, but do you need to offer that same discount to returning customers?  Not if you don’t have to – why reduce your margins on users who are likely to buy again from you anyway.  Instead why not take advantage of the fact that they are likely to buy again and offer them a discount that is more beneficial to both the customer and you?  A discount like ‘get 20% off your order over $200’ – this builds up your top line revenue while helping maintain your margins (depending on the product ranges obviously).  And conversely why risk those first purchases from new visitors by trying to squeeze more money out of them?  So while choosing to show either of these discounts to either user type will no doubt help, it makes sense to optimize who sees which discount.  This allows you to fulfill multiple goals instead of one: increase conversion rates AND manage margins AND increase customer satisfaction/loyalty.

Shipping discounts are not for everyone.

International shopping is on the rise in the online marketing world.  Many etailers are seeing strong sales growth from other countries and the opportunity to increase that growth.  So why plaster a shipping discount promo on your website when, generally, only those visitors residing in your country can benefit from it?   If I’m a retailer in the USA and an increasing amount of my sales are coming from, let’s say Canada and the UK, I don’t want to show them my ‘lower 48 states’ shipping discount as it doesn’t apply to Canadians or Brits.  I am a Canadian, and more often than not I’ll see a ‘free shipping!’ or ‘$4.99 shipping on all orders’ etc discount promotion but of course that doesn’t apply to me.  Better to target your shipping discounts to only those that can take advantage of it and show those foreign visitors a different promotion (discount-related or not).

By targeting the right discount to the right audience you are not only optimizing your conversion rate, managing your margins and providing a generally better shopping experience, but you are also maximizing the use of promotional real estate on your website.   It’s not that hard to use the same piece of real estate to show multiple discounts and promotions to targeted audiences!

And don’t forget: keep on testing and optimizing.