Are Ongoing Discounts A Better Online Marketing Tactic Than Free Welcome Offers?
Digital marketing isn’t an easy discipline. It’s a simple matter of there being intense competition and not enough customers to keep all online businesses afloat. If you want to survive, let alone perform well, you need to pull out all the stops to impress your target audience and hold on to your most loyal customers for as long as you can.
That means nailing your advertising and honing your value propositions. In this post, we’re going to contemplate two ways in which you can increase the value going to your customers. The first is providing ongoing discounts, and the second is handing out free welcome offers to win people over right away. Which is the better approach? Let’s decide.
The good and bad of free welcome offers
The biggest strength of free welcome offers is that they front-load value in a way that can win people over without needing any commitment to long-term value. You’ll notice that they’re often used by companies that provide lucrative services — this is because they know that losing a chunk of revenue right away isn’t a problem when there are months (or years) of profit ahead.
For one example of this, look at how new online casinos invite players to investigate the game offerings to find unique choices: the idea is to get them maximally hyped about the services so they’ll take the huge step of creating accounts and adding their financial details. Once they’re playing, they’ll likely feel somewhat invested and want to keep going.
One of the biggest weaknesses of relying on welcome offers is that they can be abused: someone can join up, take advantage of sign-up generosity, and cancel their subscription (or just never place another order if it’s an ecommerce operation). Another is that it can end up annoying loyal customers: they can notice you offering great deals to new customers while paying little attention to them (possibly leading them to ditch you).
The good and bad of ongoing discounts
The good thing about using ongoing discounts is that it keeps things interesting for loyal customers. They can know that if they keep returning to your site then they can continue to find notable deals, meaning they don’t have to look elsewhere for compelling value propositions. It also allows you to respond to efforts from competitors trying to undercut you.
Look at how Amazon uses its system of lightning deals to keep people interested. At all times, regardless of whether there’s a specific sale on, there are substantial discounts on many products. Anyone who loves to hunt for bargains can spend huge amounts of time browsing items that probably won’t interest them just in case they find something appealing.
One problem with ongoing discounts is that it’s hard to get the balance right between giving too much and giving too little. If you dip prices too much, you’ll damage your profit margins. If you choose items people won’t care about even if heavily discounted, you just won’t see any results. Similarly, if your discounts are too small, they won’t change anything.
Another problem is that you need to keep sacrificing value over time. If you don’t calculate things very carefully, you can even end up losing money through rolling out big discounts in an effort to tempt people to keep buying from you.
What should you use for your business?
So, having looked at these two options, we can reach the only logical conclusion about which tactic is the best — and it’s the conclusion you should have always expected, which is that neither tactic is inherently better or worse than the others. It’s all about how you use them — and since they’re not mutually exclusive, you could easily combine some welcome offers to bring people in with some ongoing discounts to bolster customer retention.
