Ever visited a company website and saw a discount that is something along the lines of ‘10% off your first order us’? This is referred to as ‘New User Discounts’ and is a strategy that has been implemented across hundreds of thousands of websites, from large established companies to smaller start-ups. In this article, we delve deep into understanding the success rate of this marketing technique and explain why it could potentially end up doing more harm than good.
What Is This Tactic?
The marketing tactic itself is pretty straight forward – whenever your website detects a new visitor, either due to a fresh IP address being identified or simply because the user is not logged in, a discount code will be displayed. This discount code is intended for use on your first order, which coincidentally, doesn’t often contain large value (Most new users will do a ‘trial’ error on certain websites, buying a smaller item before they commit to a large purchase).
Does Offering New User Discounts Work?
It has been proven through various tests that offering such a discount does indeed increase the amount of sales you receive from new users. Chances are the visitor came to your website through a certain search term, or through a social campaign, so they are naturally interested in the product(s) you are promoting. This interest coupled with a tempting offer is often enough for a customer to give your website a try.
Why It’s Potentially Bad For Business
While this marketing tactic does offer significant short-term growth, it can also discourage loyal customers. Think of it this way: If you’ve been using a website routinely for months, placing tens or even hundreds of orders, only to visit one day to see a discount that is only available for brand new users. Brands should be rewarding their loyal customers, not just trying to acquire new ones. Luckily, there are solutions that can work perfectly with new user discounts, which will briefly explain:
Pop Up Businesses
If you’re starting up a short-term business such as a pop-up store or a dropshipping website that you don’t want to pursue long term, then you don’t need a solution. Businesses similar to the two mentioned previously look to make as much money as possible within a short span of time.
If you do plan on expanding your business and turning it into a reputable brand, loyalty rewards are likely the best way to not offend your regular customers. Whether this be a point system they can build on with every purchase, or regular emails containing a discount code sent to their email, loyal customers will stay engaged and happy overall. We would recommend making the loyalty discounts more appealing that the new user alternatives – For example, 10% off for fresh visitors and 20% off for continued buyers.
To summarize, new user discounts are a great way to attract new custom and grow your online company. However, you have to ensure that loyal customers are also receiving enough perks to keep them interested and engaged.