Which is More Profitable: Discount Customers or Spendthrifts?

A large part of any e-commerce business is driven by discounts and offers, but is the discount customer segment who are motivated to purchase by these offers, really worth it?

In the end, 100% of the discounts that you apply will be subtracted from your bottom line as well as the marketing expenses spent on promoting the offer.

So how do you make sure your discounts are worth the investment?

Create Customer Segments with Clerk’s Audience

With Clerk’s Audience, you can identify your discount customers and your impulsive, spendthrift customers with just a few clicks.

To identify shoppers that base their buying decisions primarily on discounts by filtering by customers whose “Price Sensitivity” parameter is equal to “Buys Cheaper Products”

Clerk’s Audience - Customers that buy cheaper products

In order to find your big spenders, you can use Clerk’s Audience parameter “Price Sensitivity” and set it to “Buys Expensive Products”, as shown in the example below.

Clerk’s Audience - Customers that buy expensive products

Analyze Customer Segments with Clerk’s Customer Analytics

Clerk’s Customer Analytics guides your decision-making by helping you identify the best performing product segments in terms of lifetime value, revenue per year, and average order value.

In this example, the frugal customer’s Audience has a lifetime value that is 66% lower when compared to the overall customer average. Also, the average order value in this segment is lower than the overall average and the revenue per year is equal to 0.

This tells us that the majority of the customers in this segment are one-time buyers.

Clerk’s Customer Analytics - Discount Customer's Audience

Conversely, the main metrics for the Audience of spendthrifts are above the overall customer average.

Clerk’s Customer Analytics - Spendthrift’s Audience

Using Clerk Audience Analytics is a powerful tool. After identifying your main customer types and habits you can focus on optimizing your strategy towards each different segment of customers.

Strategize for different segments

Now that you have an analysis of your different customer segments, it is important to target the groups that are most likely to convert. This is crucial to lower risk and to ensure that you allocate marketing to the most profitable segments.

For bargain hunters, you want to increase their recurring purchases, since they will have to buy larger quantities to be worth the costs that you sustained for the discount and advertising costs.

A good tip is to send more automated email campaigns with high discount offers to continuously engage bargain hunters.

As opposed to expensive Social Media ads on Google and Facebook, Clerk Email provides a cheap advertising platform compared to ads on Google and Facebook.

Another strategy is to communicate when the next high discount period comes around. The chances to increase the lifetime value and returns from marketing for frugal customers, are significantly higher in these periods than in other seasons of the year. In this way, even discount buyers will have a significant, positive impact on your bottom line.

Clerk’s Email tool provides all the functionalities that you need: It allows you to set up an automated weekly newsletter, showcasing the top products at discount. Products are automatically updated every week according to sales trends on your webshop. Letting you effortlessly increase the lifetime value and yearly revenue of your discount customers!

Want to learn more about how to easily improve your conversion rate?