Every retailer’s conversion rates could use a little push. The only question is how they can attain and surpass their desired conversion rates.
Many retailers resort to temporary ideas like discounts or free shipping to draw customers into their store, but the reality is that while these are useful to increase sales, they aren’t sustainable strategies.
Implementing tactics that make your products more affordable will generally increase sales because consumers are always looking for a great price online.
Price is an important factor that almost every shopper takes into consideration before making a purchase, whether it’s big or small. Pricing varies across retailers, but does the lowest price always win?
The answer is that it depends on the product’s popularity, its elasticity, and its vendor. More often than not, having the lowest price is going to help your odds at winning a sale.
So when should you strive to have the lowest price? There are a couple of conditions.
Normally with elastic products, you have to accept whatever price the market dictates, because these products are heavily commoditized.
If you were to increase the prices of these products, you would receive negative feedback from customers. However, if you dropped your price below a competitor’s temporarily, you could stick out.
That’s because most commoditized products have short buying cycles.
No one heavily contemplates what kind of paper towels they’re going to buy quite the same way they contemplate what kind of laptop they’re interested in.
These special products are inelastic, meaning a price increase will not lead to a sudden drop in demand. It’s also good to focus on high-margin products.
The biggest thing you lose by cutting your prices is profit, but products with substantial margins are definitely safer candidates for price cuts since they can cushion the blow.
Dropping your prices to become the lowest is a great way to move inventory and win some additional sales over the competition.
However, the negative effects of constant price cuts outweigh the positive ones, and regularly lowering your price is far from sustainable.
Frequent price cuts burn profits, cheapen your brand, and fail to offset shipping costs.
When it comes to the long term they condition shoppers to only go to your store when your prices are low. This results in mere spikes instead of a steady increase in conversion rates.
When it comes to an area of focus for your business, you could step back from constant price cuts and instead focus on improving your store and your brand value.
Brand value is far more useful to improve your conversion rates in the long term, unlike short term spikes that come with price cuts.
Your store can experience the following benefits when you devote your energy to your brand value:
A genuine interest from consumers
If you do nothing to build your brand, few customers are going to pay any attention to what your store has to say in its advertisements or social media presence.
Start by treating customers right with live chat on your site, helping them with every step of their purchase process.
Having a helpful social media account in which you respond and talk to your audience is a great way to draw attention to your brand.
Natural traffic increase
One of the most powerful tools in your brand arsenal is your current customers. And one of the most useful marketing practices is word of mouth marketing.
If you present a great shopping experience on your site with hassle-free returns, free shipping, or discounts that encourage shoppers to return at a later time, your customers are going to tell their friends.
This leads to more shoppers visiting your store to check it out for themselves.
This natural publicity is not only cheaper than PR, but at times it can be more effective. Roughly 70% of shoppers trust brand recommendations from friends, and for a good reason.
The recommendations come from a trustworthy source, and are often far less abrasive than sponsored content or direct advertisements.
When you put all of these positive attributes together, you can afford to justify price premiums over your competitors.
When you perform A/B tests with your pricing strategies, you’ll be shocked to learn that many times you can price above your competitors and still maintain sales. The reason is tied back to your brand value.
A dynamic pricing strategy can take your brand value into consideration when repricing your products.
Instead of aimlessly dropping your prices and hurting your margins, a self-learning algorithm can find the sweet spot in your prices and help you protect profitability while winning sales over your competitors.
All in all, constantly working to have the lowest price in your store is a great way to achieve a spike in sales, but improving your brand value is far more sustainable.
It isn’t the easiest way to succeed in ecommerce, but it will improve your online presence and earn respect from shoppers.