Plain discounts aren't viable in the long run for your eCommerce business.
You need a discounting strategy that helps you increase your AOV and helps customers differentiate your brand from competitors.Â
Tiered Discounting can help you do that.
What is a Tiered Discount?Â
If you already know what tiered discounting is, you can skip right to the examples.Â
A tiered discount is a price reduction offered to customers when they buy products meeting the threshold. Once they meet the threshold, they’ll move to the next price range.Â
For example, 20% off $50+, 30% off $70+, and 40% off $90+ is a tier discount. As and when the customer meets the threshold, they’ll be eligible for discounts as per the tiers.Â
In this post, we’ll be covering 10 examples from real eCommerce businesses that do it well.Â
1. Pulp & Press—Encourage product adoption using habit formationÂ
Pulp & Press uses the tiered discount as a catalyst to enable habit formation to drive its organic cleanse subscription.
What stands outÂ
The landing page contains a banner to highlight the tiered discount structure.Â
- 10% off 3 day packÂ
- 15% off 5 day packÂ
- 25% off 7 day packÂ
The above structure brings forth the Fogg Behavior Model—Behavior = Motivation x Ability x Prompts.Â
Breaking it down, The Beginner(3-day), Intermediate(5day), and The Total Makeover(7-day), motivates customers with these triggers.Â
By helping customers who are keen on doing a cleanse, the packs help visualize successful outcomes. This develops confidence in their abilities. The step-by-step progression is a reward to continue a habit after picking it up.Â
TakeawaysÂ
Benefit-driven description: To trigger habit formation, use benefits as a cue to sell products. Mention the outcome, the situation before and after the product, and the intrinsic value of the product.Â
Trust signals: Trust signals pertaining to the industry inspire confidence in the buyers. For instance, Dairy free, No sugar added, and Gluten free encourage customers to buy.Â
2. Elysium Health—Invoke the power of savings with subscriptionsÂ
To motivate customers to increase their spending, Elysium invokes the power of savings.Â
What stands outÂ
The order of the subscription packages invokes the price presentation order. In this study, it was found that when prices are listed in descending order, the customers tend to choose the higher-priced option.Â
Price anchoring serves as a reference for customers to evaluate the offer.Â
The savings in the form of percentages reinforce a subconscious trigger to seek instant gratification.Â
TakeawaysÂ
Tangible value: To emphasize tiered discount benefits, use price anchoring to highlight the tangible value. For example, $̶5̶0̶ $30 is a visual representation of price anchoring. The slashed price is a reference for customers to evaluate the offer.
Outline the subscription process: Assure the customers of a hassle-free subscription by mentioning FAQs such as cancellation, pausing, and returns.Â
3. Modcloth—Use extended sales to loop in customersÂ
Extended sales can help you attract customers who missed out on the offer earlier. ModCloth uses a countdown timer on its banner to strengthen the time sensitivity and urgency.Â
What stands outÂ
The copy Buy More, Save More Extended! Â is compelling since the meaning of More conveys the meaning of infinite. Since it's in the uppercase, it grabs the attention of the reader as it signals its importance to the reader.Â
TakeawaysÂ
Framing Effect: Frame your copy differently to increase the perceived interest of customers. Instead of get 50% off, say Unlock 50% off.Â
Real urgency: When in doubt, choose real urgency (countdown timers) over implied urgency such as Shop Now or Buy Now.
4. City Beach—Build urgency with limited-time offerÂ
City Beach combines a tiered discount with a three-day limited-time offer.Â
The tiered discount is easier to calculate as customers can make mental calculations. This makes decision making instant which can be attributed to Bounded Rationality.Â
It is a cognitive bias where customers tend to make suboptimal decisions based on the limited information available. This is further influenced by cognitive restrictions and time limitations.Â
TakeawaysÂ
Visual hierarchy: Use the 60-30-10 rule in your content. Meaning: 60% must constitute the dominant color, 30% must contain secondary color, and 10% must consist of an accent color to strike a balance between the first two.Â
Product recommendations: Feature category recommendations in your emails to evoke the Mere Exposure Effect. As per this principle, customers are likely to buy things because of our tendency to like things the more we’re exposed to them.Â
5. Kenneth Cole—Woo last-minute shoppers with optionsÂ
33% of last-minute buyers decide to buy their gifts depending on how soon they can get them. Kenneth Cole offers options to last-minute shoppers by presenting options.Â
What stands outÂ
The last-minute gifting elicits urgency, an intense emotional state. This brings forth the principle of Affect Heuristic Bias. According to this principle, customers make decisions based on emotions, as opposed to definite information. This leads them to make decisions based on the feeling of FOMO.Â
TakeawaysÂ
New Arrivals: Customers like to seek new experiences and hence buy new products. 75% of customers are open to trying new products.Â
Storytelling: Your copy and product description must make the customer the protagonist. Use the Cause and Effect Principle when writing the copy. Apply grammatical devices such as contractions, exclamation, rhetoric, etc.
6. Jessica London—Use time sensitivity as an aidÂ
With a 3-day tiered discount sale, Jessica London leverages attentional bias to drive conversions.Â
What stands outÂ
Attentional Bias is a cognitive bias where customers don’t factor in all the factors before making a purchase. They rely on one piece of information to make decisions while ignoring the others.Â
TakeawaysÂ
Hero text: Make the font size 16-20 to enable cognitive ease. The discount should be the hero text immediately visible to the customers. Â
Loyalty program: Outline what’s in store for being a member. Specify Member price versus Non-member price, free shipping, early access to sales, and other benefits.Â
7. Thistle Farms—Drive seasonal sales by emphasizing contextÂ
Thistle Farms runs tiered discounts for its summer sale. A flash sale can increase your transaction rates by 35%.Â
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This discount tier example works as it offers a solution to a seasonal problem. Customers are influenced to act because of Action Bias. It’s a psychological phenomenon where people tend to take action instead of doing nothing. Even when there’s little to no rational reasoning behind it.Â
Takeaways Â
Value proposition: Your value proposition must demonstrate your purpose. In the above example, naturally handcrafted by women survivors projects the brand as purpose-driven. 86% of customers are attracted to purpose driven companies.Â
Typography: Using the right typography eliminates cognitive strain. It helps customers in quick decision making with the help of emotional cues. The font in question, Roboto, makes for a friction-free reading experience, working equally well for digital and print media.Â
8. Reebok—Leverage instant gratification       Â
Reebok uses the principle of hyperbolic discounting led by the copy.Â
Hyperbolic Discounting is the psychological tendency to choose instant rewards, no matter how small, over long-term rewards. The copy uses parallelism—the use of similar words, sentence structure, and clauses to emphasize parallel ideas in a sentence.Â
TakeawaysÂ
Promo codes: Place promo codes right below the last tier. Promo codes drive conversions as they elicit an increase in oxytocin levels by 38%, making customers 11% more happier.Â
Store locator: Adding a store locator to your emails can guide customers to the nearby physical stores. This ensures cross-channel integration leading to a 13% increase in spending in-store.
9. Moosejaw—Get unconventional by offering gift cards
Tiered discounting doesn’t always have to be a price reduction. Moosejaw offers gift cards as part of tiered discounts.Â
What stands outÂ
Gift cards are a powerful incentive that motivates customers to spend more. 72% of customers spend 38% higher than the card value. They encourage new product trials white eliminate risk aversion.Â
TakeawaysÂ
Sensory marketing: Use images that trigger a pleasant response by either appealing to one of the five senses—sight, taste, touch, sound, and smell. For example, a person smiling or a baby laughing.Â
Product badges: Use product badges like Fast Selling, Customer Favorite, and Low stock to persuade customers. Product badges such as these can help you increase conversions by 55%.Â
10. Herschel Supply Co.—Invoke impulsivity using monochrome
Using a monochromatic color presents a collective message to the users. Herschel uses black and white, the most common monochromatic color in its tiered discounting email.Â
What stands outÂ
With the numbers in white, the text enables cognitive ease—the ease and fluency of the brain to process information. There's a low chance of misinterpretation. Â
Since the promo code is applied at the checkout, it compels customers to move to the checkout stage. Leading to impulsive purchase decisions.Â
TakeawaysÂ
Terms & Conditions: Articulating the terms and conditions of the sale regarding returns and exchanges ensure transparency. It helps you reduce your returns rate while limiting liabilities and financial compensation that arise.Â
Single-column layout: A single-column layout makes your email look good without breaking. It ensures readability while driving the focus toward a single CTA.Â
Tiered Discount 101
1. What is the difference between tiered discount and volume discount?Â
A tiered discount is a strategy where the price per unit remains the same until the purchase exceeds the next tier. On the other hand, volume discounts involving the same price per unit remain constant regardless of the purchased quantity. For example, 25% off on 3 or more T-shirts.Â
2. How do you calculate tiered discount?Â
Let's assume there are two discount tiers.Â
0-100$ 10% off and 101-200$ 20% offÂ
A customer buys items worth 150$. In such a case, for the first 100$, the discount is calculated at 10%. For the remaining 50$, a 20% discount is applied.Â
Therefore, 10+10 equals $20 which is the tiered discount.Â
3. How tiered discount can increase your eCommerce sales?Â
Tiered discounts increase the perceived value of goods by reducing the price bought from respective tiers. It nudges customers to spend more by moving to higher tiers, increasing your AOV.Â
Read further: How To Increase eCommerce Sales: 23 Immediately Actionable Ideas
4. How to offer tiered discounts on Shopify?
Go to your Shopify Admin account, and follow these steps.Â
- Head to DiscountsÂ
- Select codes and click Create discountsÂ
- Specify the promo code, if anyÂ
- Type the discount percentage and after the tier valueÂ
- Select the Minimum Purchase Amount and enter the number, for the tiered discount to work.Â
- Save and repeat the steps for other tiersÂ
In the end
You're all set to implement tiered discount, but how well does your traffic convert?
98% of visitors who visit an eCommerce site—drop off without buying anything.
Why: user experience issues that cause friction for visitors.
And this is the problem Convertcart solves.
We've helped 500+ eCommerce stores (in the US) improve user experience—and 2X their conversions.
How we can help you:
Our conversion experts can audit your site—identify UX issues, and suggest changes to improve conversions.
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