Sales & Marketing

Refusing discounts to customers costs retailers 25% in extra sales each month

3 min read

28 September 2015

A new study has revealed the uplift on offer to brands when vouchers and discounts are part of their marketing strategy.

This study was undertaken by analysing on-site data that revealed the average retailer could earn an extra 25 per cent in sales revenue per month by offering discount codes and vouchers.

The research shows how the majority of startup retailers and service providers within Britain begin providing discounts after two years of trading, with as many as 63 per cent wishing they’d done so sooner.

Using on-site data, the team at Voucher Cloud analysed computed that an average retailer offering discounts on their products can generate an additional three-figure increase in sales per month through providing discounts and voucher codes, with the average basket size totalling £80.

Following on from their research, the company interviewed 875 retail and service provider business owners from around the UK. The companies, which had to be running for at least two years prior, were asked about how discounting had impacted their business.

Initially, all respondents were asked “How long after launching your business did you begin to provide voucher codes/discounts for/on your products?”, to which the majority of respondents, 51 per cent, said it had been “after two years” of trading. However, 63 per cent of these respondents said they wished they’d offered discounts earlier on. 

All respondents were then asked “What was your motivation for providing voucher codes and discounts?”.

When shown a list of possible responses and told to select all that applied, the top five answers were as follows:

  • Wanted to attract new customers – 74  per cent
  • Had to meet sales targets on a particular product / service – 61 per cent
  • Wanted to reward current customers – 58 per cent
  • Wanted to increase brand awareness – 50 per cent
  • To coincide with/boost new product launch – 32 per cent

All respondents were then asked, “Do you find that some discounts drive more sales than others?”. 

Four-fifths of respondents, 81 per cent, agreed, with respondents noting that the most popular deals were a “20%+ discount” (26 per cent of respondents) or “freebie vouchers/offers” (23 per cent).

Read more about offering discounts:

“Whatever a company’s reasons for offering discounts and voucher codes, it’s difficult to argue that it doesn’t work,” says Chris Johnson, head of operations at vouchercloud.com.

“Changes in consumer behaviour has dictated desire for discounting over recent years, and with the added incentive of a 25 per cent uplift in sales for brands when utilising a discount-led channel, it should be a consideration for brands who have historically been resistant to lowering margins.”