January 13, 2022 | Authored by: Jesus Luzardo
Stackable discounts: why they can be a subscriptions winner
“Not valid in conjunction with any other offer.”
For customers, these are disappointing words.
For businesses, it’s common, sensible practice. How can merchants afford to let customers stack discount upon discount? Won’t it shave off the markup and drastically reduce profits?
When it comes to subscriptions, the answer may be “no.” Contrary to popular wisdom, stackable discounts, when done correctly, can actually build loyalty, boost retention and increase revenue for subscription brands. Let’s consider why.
Stop thinking instant profits. Start thinking customer connections.
Discounts are a critical part of business strategy. Promotional coupons and reduced pricing are powerful, age-old tools to attract first-time customers, and to tempt repeat customers to buy again.
While a discount cuts into immediate profits, its purpose is to close the sale, ensuring actual revenue right now. In addition, by converting the customer, even at reduced revenue, the merchant opens the door to establishing a customer relationship, which may turn out to be profitable in the future.
The problem is that merchants typically have to contain their discount offers so as to maximize profitability while still enticing the customer. This can be a difficult balance to achieve. Many merchants draw the line at stackable discounts, prohibiting customers from taking advantage of more than one discount or offer at a time.
However, for subscription brands who use bundling as a pricing mechanism, this doesn’t have to be the case anymore. With sophisticated subscription tech, brands can customize bundles that incorporate stackable discounts, maximizing potential revenue even while offering multiple discounts, creating irresistible offers and building customer connections.
Unlike one-time purchases, a subscription is a long-term relationship, with many opportunities to present bundles and pricing offers to customers. This means brands have a complex playing field on which to explore smart discounts, stacking them in customized bundles to get the most revenue from each customer.
Rather than focusing on instant revenue, subscription brands can use deep data intelligence and advanced stacked discounting mechanisms to create better bundles and secure recurring revenue over the long term from each subscriber. After all, it is preferable to offer a customer 60% discount today, ensuring you retain them, rather than losing their subscription altogether because the discount is not tempting enough.
Over time, the company can make up for stackable discounts with the customer’s recurring payment as a result of their subscription renewal. In addition, every extra day or month that a customer stays on as a subscriber is an opportunity to deliver amazing experiences that will convince them to renew again when the time comes.
Fight subscription fatigue with stackable discounts
Four out of five consumers now say they are suffering from subscription fatigue. In a saturated marketplace, brands must find ways to entice customers to stay. Promotions and discounts are a timeless tactic that consumers will always love, and now, they just got smarter.
Explore Vindicia’s subscription tech solution and see how you can create personalized, stackable discounts on your subscriptions that customers can’t resist.
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