Both have their pros and cons. The question is: which will deliver the most results for your ecommerce store?
We all know the difference between store credit and percentage discount. But most of us don’t know the practical differences, the advantages of one over the other and the disadvantages that come with each. In this article, I’ll discuss the positives and negatives of both store credits and the percentage discount.
The value of discounts
Discounts are a business tactic that receives much skepticism, but has proven to work, if used right. If you want your discounts to deliver results, you need to promote the discount as much as possible. The most effective way for eCommerce stores that do not have a physical store is through organized social media marketing. Discounts can be great, but just like everything in life, it has its pros and cons.
First of all, discounts can increase sales dramatically. The discount can be used to draw customers to your online store, which may lead to them buying items that aren’t on discount. Another positive effect of discounts is that you can monetize unused inventory. Businesses can get rid of their old inventory using discounts. This actually has two benefits: broadening your market and gaining more customers.
There are a lot of benefits to using discounts, but there certainly are some downsides. Subliminally, you are telling the customer that your item isn’t worth the full price by selling an item for a lower price than you originally asked. Discounts also can attract the wrong customers. You won’t attract loyal customers by using discounts. Instead, they may only come back for more discounts.
A plus side of store credits is that you can use this as a smart marketing tool. Most eCommerce stores send reminder emails and updates, to remind the casual online shopper that a $10 gift card is waiting for them in the cart. This can dramatically boost traffic to your store and will help you reach out to more customers.
Store credit may increase customer loyalty to your store, but for the majority of people who don’t limit themselves to just one shop, will not use this to their advantage. Store credit are increasingly used as a way to attain new customers and market to those looking to try a new product. This is seen frequently with monthly box subscriptions. Ecommerce stores have a harder time educating about a product because they can’t showcase a physical item to the consumer- store credit can help with that by offering whatever amount to new customers. A major disadvantage is keeping those customers after they use this store credit- what guarantees a return?
Which is the best?
The conclusion is hard to draw here. Each has its pros and cons and it may vary per case which will work the best. Study the business tactic you are going to use to maximize sales, customer loyalty and broadening your market. Social media marketing is still vital in both methods, whether it be discount percentages or store credit.