Offering a discount is defined as reducing the price of a product/service to give customers something they can’t refuse. Implementing discounts/promotional codes is a viable customer acquisition strategy for SaaS businesses looking to generate more leads.
Using discounts and promotional codes in SaaS to boost your revenue
Psychologically, the term “PROMO CODE” creates attention and even excitement. Customers find pleasure and joy in receiving an exclusive offer. Some even spend several hours a week looking for ways to save money. Daily discounts are often the sales mechanic for retail businesses.
But SaaS is not retail. In SaaS, the goal of a discount is not only to offer a reduced price to secure a customer’s subscription but also to retain them for a higher Lifetime Value (LTV). A study conducted by Price Intelligently revealed that discounts on SaaS software decrease the long-term value (LTV) by 30%, leading to a higher churn rate and less willingness to pay higher prices. Thus, if discounts are not offered intelligently, they can…
Effective strategies for discounts, promotions, and codes
- Beta user discounts: If you’re working on a new product, service, or application and have been in beta mode with real users testing your software but think you’re finally ready to release the final product, one of the best promotional moves you can make is to offer your loyal beta users a discount on the final product.
- Time-limited discounts: Discounts should always be time-bound. If you don’t set limits on the offer, it will feel like you’re discounting your product for no reason. This can also devalue your product. Many companies use limited-time discounts to instill a sense of urgency in potential customers.
- Referral discounts: If you run an affiliate marketing program, reward affiliate marketers who actively promote your product with a multi-tiered system of rewards and discounts. Someone referred five of their friends? Start offering them a free month at that point or even a heavily discounted rate on their next billing cycle.
- Seasonal promotional campaigns: Seasonal promotions are another popular way for businesses to see a boost in their activity. Get creative with your discounts each year, especially towards the end of the year when many companies are looking for new services for the upcoming year.
- Loyalty discounts: Do you have a customer who has been with you for five years? How about a whole decade? Instead of just sending them a congratulatory email, you can send loyal customers promotional codes. These good PR moves can lead to them spreading the word about your company and getting their friends to start using your services.
Therefore, discounts used at the right time can always entice potential customers to turn to you.