Give an offer, don’t give away profits.
When you are trying to drive an action - a sale or some other type of transaction - think of an offer that would make it attractive to customers. Be careful not to give away more than you need to.
For example, in online retail, free shipping is all the rage for increasing conversions, but if used as a ubiquitous offer it can quickly eat away at margins. Why? Many customers would purchase anyway because you offer value beyond a discount.
The key to developing an offer that drives the right action lies in knowing your customer segments inside and out. Here are three simple ways to segment your customers and the offers that make sense for each:
[quote]First-time visitors: For first-time visitors to your Web site, you want them to buy anything for any reason. You should present the most aggressive deal to them.
[/quote][quote]Infrequent buyers: For customers who buy from you infrequently, entice
them to try something new via a cross-sell promotion or a limited-time offer
to purchase a bundle or larger service offering.[/quote][quote]Loyal, frequent customers: Do not lower your margins by giving a discount
to customers who would likely buy from you anyway. Instead, think about the behavior you want to drive, such as increasing average order size through premium bundles or upselling to higher margin products, and structure the offer accordingly. Better yet, use the fact that they are loyal by enticing them to give you a testimonial.[/quote]