To offer discount code or not?

[CJDB]

Hello 

I have noticed that most retailers in my genre generally offer 10% or more off with a newsletter sign up on the home page of the website, however they are generally more expensive for like for like product. We like to keep our prices really fair and only what we would pay ourselves as a result in order to give every customer 10% off we would need to up our prices to cover this cost slightly. We also offer free delivery over just £35 etc so there are incentives there. 

My question is about shoppers mentality. Do shoppers prefer receiving 10% off to just being given a lower price point in the first place. In short does not offering a discount code negatively impact sales? 

Experience and opinions welcome 🙂

[Sophia]

Hello, @CJDB!

The short answer is yes, shoppers generally do prefer to receive a discount. As a newsletter signup incentive, this can result in more subscribers.

The longer answer is that it depends in part on who your audience is and what you're selling. For example, I don't expect to see many (if any) promotions for small batch and/or handmade products. If something is time consuming to make or limited edition, my focus as a customer is on whether or not I want the product, and not whether I think I can get it for a better deal.

I am on some email lists for products that are very limited edition and are never on sale as far as I've seen. The purpose of the newsletter in those cases is for subscribers to be notified first when new items are available so they can buy before they're sold out again. But with bigger businesses and products that aren't really a nice-to-have or one-of-a-kind, I do often expect to see introductory offers. 

Do you have a clear idea of what you'll be using your newsletter for? There's a free course available here to help you determine what customers will get out of your newsletter and how to position it to encourage signups: Introduction to Email List Growth. Essentially, as long as you're clear about what customers will be getting, you're likely to have a more engaged group of subscribers that will want to stick around if you deliver on what you promise they will receive. 

I'm curious to learn a bit about what you're selling and how else you have been marketing your products. Looking forward to reading the experiences and opinions that others share here as well.

[VitaF]

Hello!

The reason why store's offer some sort of a discount with a newsletter sign up is that this way you are able to get a hot leads. This means that you will be able to contact these people in the future with your updates, special offers and much more, which starts forming a deeper brand-customer relationship. And important thing is that return customers are much easier to sell to and are said to be up to 5 times cheaper than acquiring new customers. 

Definitely, many shoppers will "take advantage" of the one-time discount, but likely not all of them will unsubscribe from your newsletter once their first purchase is done. Knowing that your store was able to grab their attention enough that they were willing to give your their email address or phone number and they wanted to get the discount, it's likely they wish to return at some point. And as long as the content you send out provides them some sort of value, you have won a customer who will be well informed what is happening with your brand.

In fact, we just wrote an article on why people opt-out from receiving business SMS messages. Perhaps this will help a bit when you decide to implement a newsletter sign up discount. 

[the-pricing-guy]

Hey @CJDB , Excellent question. It's different for every industry and brand, depending on several factors. Fortunately, discovering optimal discount (i.e. the discount that maximizes customer LTV) is a solvable problem. Read my article here.

My background is pricing experimentation, and ultimately you want to understand

• your customer lifetime value (which can be estimated by avg spend per customer over a few months, combined with churn rate)
• sensitivity to discounts

As you understand, the intuition is that it might be worth paying a bit up front (in the form of a discount) if that's more that recouped by increased LTV.

lmk if you're interested in chatting further. Also check out our app (Dash Price & Promo Analyzer--in beta).

Good luck!

Tim