When you’re shopping online, you probably at least peek around for discounts…right?
No, we’re not psychic – we just know that over 8 in 10 Americans think about finding discounts and offers throughout their online shopping journey. We definitely want The Things, but – especially in economically uncertain times – we want them to be worth our financial while.
That uncertainty isn’t unique to consumers, though. Business owners live here, too! And discounts are typically the last thing on the minds of merchants looking to grow their revenue and maintain their brand image. Still, when executed effectively, discounts can be a great incentive for new customers to buy and old customers to stick around.
Discounting is a delicate balancing act – and one that many eCommerce stores struggle to get right. In the world of luxury brands, the going’s even harder. Still, luxe retailers offer discounts and sales just like any other business; they just have to find savvy ways to maintain their brand’s high value perception while doing it. That being the case, all kinds of Shopify merchants can benefit from their approach(es) to discounting.
But which method do we choose?
Reduced shipping? Referral credit? Free pastries? And how the hell do stores manage all of these options without calling it quits or losing money?
Fear not, dear merchant – we’ve got you covered.
Different Types of Discounts and How Luxury Brands Use Them
Promo codes are straightforward and super easy to implement on Shopify (and are available to merchants on all Shopify plans!) – but other options work just as well. Here are a few to consider.
Percentage Sale & Dollar Value
Let’s start off with a really simple discount - the percentage sale. As the name suggests, this kind of discount takes a percentage off the total cost of a purchase. (Same goes for dollar value sales, which take a dollar amount off the total cost of a purchase. For the sake of brevity, we’ll just reference percentages.)
Most luxury brands avoid percentage sale discounts. (Seriously – gold star to the first reader who can spot a SALE link on Balenciaga’s site – and they sell CROCS, for crying out loud. <sound of Gabrielle Chanel rolling over her in grave>)
But here’s the kicker: really, a lot of these major fashion houses only appear to avoid percentage sale discounts because they’re always showcasing their most recent collections on their own sites while quietly shipping unsold inventory from past collections off to third-party aggregates, like Matches Fashion or Farfetch. There, merchandise that sits too long can be discounted on the DL, thereby avoiding any obvious threat to a brand’s elite legacy.
“Oook, good for Balenciaga but like, I’m not selling $650 t-shirts. I have no way to clandestinely farm out my less desirable inventory to far away lands.”
Right. But you can quietly offer percentage sale discounts while making your customers feel VIP af by adopting a strategy (subtly) exercised for eons by the likes of Dior, Fendi, Prada, and other exceptionally high-end brands: the private sale.
Luxury retailers know their clients are exacting. If these brands are going to provide percentage or dollar discounts, they’re going to make it an experience. Big sales are sparse, highly hyped, and typically invite-only (or at least gated in some way).
So, how can this work in the less-than-Hermès eComm space?
How to Set Up a Private Sale on Shopify
First, get yourself a really good email marketing platform with excellent customer segmentation and brilliantly designed email campaigns.
Second, decide what you want to put on sale: seasonal merchandise? Items you’ve struggled to sell for goddess-only-knows-what-reason? Perhaps you want to pre-sale a new line you project will perform exceptionally well? Just pay close attention to your margins; discounting the wrong items – or discounting the right items too far – is a surefire way to lose money.
Third, create a private sale collection on your site and lock that bitch down with a passcode. Tag customers directly within Shopify as VIP, and set up your sale so VIPs will be granted access automatically, once directed to the private page.
Creating customer tags is easy. Navigate to their customer profile and add the tag VIP. Once you add it to the first customer, the tag will be saved to your Shopify tag library for later use.
How do you decide who’s a VIP? Lifetime spend, baybaaaayyyyy. Reward the people who spend the most with you! You could also consider customers who’ve been around a long time (legacy customers) or those who have made the highest volume of successful referrals over time.
Fourth, use your ultra-savvy email marketing machine to target your highest spenders and/or greatest volume shoppers with exclusive access to your sale.
If you want to open the sale up to a wider audience, do so in tiers: historically higher-spend shoppers get first dibs (and maybe a higher discount, but that’s up to you and your bottom line) while second stringers are admitted later.
Whatever your sale looks like, make sure your customers know it’s just for them and for a limited-time. Deactivate your collection at the end of the sale period and, voilá, you’ve just created a private sale.
“Wow. Much extra. What if I’m not reaching for deity-status brand perception? I just want to offer percentage sales on stuff I want to move quickly.”
Shopify’s got you there, too; and the process for setting up percentage and dollar value discounts is exactly the same, no matter what kind of sale you choose to offer.
How to Set Up Percentage Discounts in Shopify
Go to your Shopify admin, click on Discounts in the side menu, and choose if you want to offer a discount via promo code, or an automatically applied discount that can be assigned to specific collections or products.
Let’s assume you want to offer an automatic sale that customers don’t have to remember a promo code for. In Discounts, Shopify makes it easy peasy to choose a percentage off, a dollar amount off, or even a Buy X Get Y promo. It truly couldn’t be simpler.
(Pro tip: Shopify advises using a dollar value discount if your product is over $100 and a percentage sale one if it’s less than $100.)
Free Shipping
In the world of eCommerce, the word free evokes unparalleled euphoria – especially when paired with the word shipping. (Okay well maybe not euphoria but people like it. A lot.) We’ve all been ready to take the plunge on an order, only to be assaulted with a $10 (or much, much more...thanks, 'Rona) shipping charge and leap head-first from the cart.
And it’s not just pleb shoppers running for the hills at the sting of shipping costs, either. Many ultra-luxe brands and retailers offer free shipping (and, in some cases, free returns) on all orders: Tiffany & Co., Neiman Marcus, Kate Spade, Coach, and Bergdorf Goodman, to name a few.
How to Set Up Free Shipping on Shopify
If you want to set up free shipping for all orders:
- From your Shopify admin, go to Settings > Shipping and delivery.
- Next to General shipping rates, click Manage rates.
- For each shipping zone, add the free shipping rate:
- Click Add rate.
- Enter the name for the rate.
- Make sure that the value of the Price field is 0.
- Click Done, then click Save.
If you want to set up free shipping for orders over a certain value:
- From your Shopify admin, go to Settings > Shipping and delivery.
- Next to the shipping profile where you want to add a free shipping rate, click Manage rates.
- Add the shipping rate to each shipping zone where you want the free shipping rate:
- Click Add rate.
- Enter the name for the rate.
- Make sure that the value of the Price field is 0.
- Click Add conditions.
- Select Based on order price.
- Enter a minimum price.
- Click Done.
- Click Save.
There are heaps of other options for calibrating free shipping on Shopify, too. Read all about it in our very fancy, very free Shopify DIY Guide.
Volume
While volume discounts aren’t exactly common practice for high-end apparel brands, if you have the right kinds of products or services, they can be a real cash multiplier.
A volume discount incentivizes a customer to purchase a higher quantity of one thing by offering discounts relative to the quantity they buy. Most of us probably think of bulk stores like Costco, where you can buy a 20 pound barrel of nuts for $13 when 6 ounces of the same nuts cost $14 at Whole Foods. (OK, it’s an exaggeration, but you get the point.)
Great for families with 5 children – every one of them a growing boy – but not exactly Givenchy, is it?
But hold up; what if you’re a luxury service provider, like…say, a medspa or laser hair removal clinic? AhHhHhhhh…
For example, SEV Laser (a laser hair removal provider of choice for Kim Kardashian and other Hollywood Elite) offers a package discount on laser hair removal services: buy 5 sessions and your 6th is free.
This is particularly enticing because, as any girl who’s sick of a daily razor-fight with her aggressively French heritage will tell you*, laser hair removal requires at least 6 visits to be effective.
*Writer’s Note: hi, it me.
Let’s say you’re a SEV customer and you want a full-leg lasering. (Sounds morbid; isn’t.)
SEV charges $155/session for a full leg service. $155 x 6 sessions is $930. With the discount, however, the price comes down about 17% – to $775. Since they require customers to pay the full amount up front (which is virtually always the case with volume discounts), that’s a welcome price break!
Volume discounting is also great because there’s more than one way to spin it. You might say:
- Buy 5 sessions and your 6th is free
- 6 sessions for $775 (a $930 value)
- Buy 6 sessions, get $25 off of each
- Buy 6 sessions for just $130 each
However they choose to implement volume discounts, SEV gets essentially guaranteed revenue and you go hair-free at an affordable price. Score.
How to Do Volume Discounts on Shopify
Only Shopify Plus merchants have access to native volume discounts, via their wholesale channel (which is potentially excessive for most non-wholesale brands).
However, there are a plethora of volume discounting apps available in the Shopify App Store. (VolumeBoost appears to be a popular one.) Simply pick one that fits your needs and budget, then get to discounting!
PSST: Volume discounting may also be accomplished with custom coding. If only there were a talented agency to help you with that…
BOGO
We don’t have to tell you that BOGO stands for Buy One, Get One. (...right?)
BOGO promotions offer one (usually relatively high-value/high-margin) product at full price, paired with another product free or at a significant discount. If you asked behavioral economist Dan Ariely under what circumstances BOGO works most effectively, he’d probably say, when you’re able to offer something for free.
🐇 (Relevant) bunny trail time! While writing his book, Predictably Irrational, Ariely discovered that if you offer a Hershey’s Kiss for $0.01 and a Lindt truffle for $0.26, most people will choose the truffle. (Duh.) However, if you offer the truffle for $0.25 and the Kiss for free, 90% of people will choose the Kiss – even though the price difference between the two is still 25 cents.
Yup, there’s just something plain intoxicating about getting something you want for free – even if you didn’t know you wanted it when you walked (or clicked) into a store.
Luxe brands (particularly in the fragrance and beauty industries) commonly use BOGO deals via gift with purchase. For example, you might be casually browsing for $245 La Mer eye cream, and…
Whether it’s old inventory that hasn’t moved, items with super wide cost margins, or some other financially advantageous goodie, customers don’t really care – they’re simply more likely to be beguiled into purchasing a higher-priced product (or collection of products) if offered something they perceive as valuable, for nothing.
Setting Up BOGO Deals in Shopify
If you want to set up a BOGO offer, go to the “Discount” page in your Shopify admin. When you click “Create Discount,” simply modify the options and select “Buy X get Y”. From there, you can set up your very own BOGO discount.
Referral Codes
If you’ve read our musings on customer loyalty (this one, for example), you know that referrals are a key player in any good loyalty program.
Referrals load up shoppers’ networks with social proof for your brand, heightening positive awareness and, ultimately, upping your conversion rate.They’re also a piece of cake to set up if you already have a loyalty program in place through an app like Yotpo or Smile.
When it comes to the good stuff you offer for referrals, there’s a lot of freedom to get creative! A few options might be:
- An outright discount for both the refer-er and the refer-ee
- For tiered programs, higher tier placement after a certain number of successful referrals
- A “points” system, where points = products your customers already want to buy from you, for freeee
If you’d like to start a referral system by way of a kickass loyalty program, check out our post on the ROI of loyalty programs here to see what kind of program might best fit your Shopify store – and how to set it up!
Using Discounts to Achieve Your Goals
So, now we know that we don’t have to equate “discounts” to enormous red SALE! SALE! SALE! signs. Even the most luxurious merchants among us find cunning ways to work the discount angle – and you can too!
BUT FIRST: You need to know your customer, know your margins, and know your goals. Yes, essentially any brand can use discounts to their advantage, but the way you go about it will need to be tailored to you.
Is your customer high-falootin’ and will therefore be turned off by obvious use of discounts? Best to try something covert – perhaps an exclusive pre-sale of an upcoming collection.
Looking to move some slow inventory? Consider percentage discounts or BOGO.
Trying to increase brand awareness and your customer pool? A properly executed referral program will get the word out.
Any combination of the methods we’ve discussed today could be just what the doctor ordered! Word to the wise, though: don’t try to do too much at once. Throwing a pot of spaghetti at the wall is not the way to find out what’s going to stick.
Speaking of stuck: does information overload have you feeling…that way? We can help!
