Struggling to get customers to add more to their cart without seeming pushy? Tiered discounts might be just what you need. It’s not just about boosting sales—it’s about giving shoppers a reason to spend a bit more while feeling like they’re scoring a great deal.
Here’s the thing: a lot of businesses hit a wall when trying to increase their average order value without making things overly complicated. Tiered discounts make it easy: spend more, save more. It’s a win-win because people love feeling like they’re getting something extra.
In this guide, we’ll break down what is tiered discount and how it works.
Tiered Discounts - What Are They?
What is a tiered discount? It’s a simple yet effective strategy: the bigger the purchase, the bigger the discount. There are various types of discounts in marketing, and this is just one example of how a strategic approach can boost sales. It’s all about creating that "just one more" mentality—By setting spending thresholds, you motivate customers to add just a few more items to their cart to unlock a higher discount.
Psychologically, this approach leverages the Endowed Progress Effect. Once customers feel like they’re making progress towards a goal (like hitting the next discount tier), they’re more likely to finish the task. The result? The more they buy, the more they save—and everyone walks away happy.
How to Implement Tiered Discounts: Step-by-Step
Getting tiered discounts right is like baking a cake—stick to the recipe, and you’ll create something sweet for everyone. Here’s how to craft a winning strategy:
Set Clear Tiers (and Keep it Simple)
First things first: you need to set up spending or quantity thresholds where the discount grows as the customer buys more. For example:
- Spend $50, get 10% off
- Spend $100, get 15% off
- Spend $150, get 20% off
The idea is to tempt customers to stretch their spending just enough to hit the next discount tier. Don't go too complicated, though. You don't want your customers scratching their heads and doing mental math just to figure out if the discount is worth it.
Pro Tip: Keep your tiers clear and achievable based on your customer's average order size. If they usually spend $60, set your first tier at $75—just enough to nudge them higher.
When setting up tiers, keep in mind strategies like those used during major shopping events like BFCM pricing strategies.
Choose the Right Products or Services
Applying tiered discounts to your entire inventory might seem tempting, but resist that urge. Target specific products, such as best-sellers or slow-moving items that need a push. If you're a service-based business, you can structure discounts around service levels or subscription lengths:
- Monthly plans: 10% off
- Annual plans: 20% off
- Multi-year plans: 30% off
Pro Tip: Keep an eye on your profit margins—offering steep discounts across the board can eat into your profits faster than you think.
We recommend reading "What is Volume Discounts?" to learn more about the differences between volume discounts and tiered discounts, and decide which is best for your business.
Automate the Process (So You're Not Doing All the Math)
Trust me, managing tiered discounts manually is a headache you don't need. Automation tools simplify the process, handling everything from applying discounts to tracking results. One option to consider is Discounty, which makes setting up tiers effortless.
Using an automated tool like Discounty not only saves time but also ensures accurate application of discounts. Learn more about the benefits of using automatic discounts and how they can increase conversion rates.
Pro Tip: Use a progress bar on your site to show customers how close they are to the following discount tier. People love to see that little visual reminder of how much more they need to spend to unlock bigger savings.
Want to see how to set up automated tiered discounts step-by-step? Here’s a guide that shows you how to do it effortlessly with the Discounty app.
Promote the Discounts Clearly
Your discounts won't drive sales if no one knows about them. Highlight the tiered discount structure in your email marketing, on product pages, and with on-site pop-ups.
While promoting your tiered discounts through email marketing and pop-ups, consider using seasonal themes like Halloween to grab customer attention and boost engagement. If you’re looking for inspiration, check out our Halloween marketing ideas for Shopify stores to make your promotions stand out.
Example: Use clear calls to action like "Spend $50 more and unlock 20% off your total purchase!" You could even run limited-time offers to create urgency.
Pro Tip: Make sure the discount tiers are apparent, both on desktop and mobile. If people can't figure out how much more to spend to get a better deal, you risk losing them.
Track Performance and Adjust as Needed
Once your tiered discount strategy is live, keep an eye on the data. Are customers consistently hitting your top tier, or are they stopping short? If they're not reaching the highest discount levels, consider adjusting the tiers. Maybe that top discount of 20% at $200 is a bit too steep for your customer base—try lowering it to $150. Analyzing the data will help you understand what works best, and it’s important to differentiate between general promotions and specific discounts. For more clarity, read our guide on the difference between promotion and discount to fine-tune your approach.
Pro Tip: Use the analytics provided by Discounty to track which tiers are working best and adjust accordingly to optimize your strategy.
The Benefits of Tiered Discounts: Why They're a Game-Changer
Tiered discounts come with plenty of advantages, but perhaps the biggest one is motivating each customer to increase their spending. Let’s explore how these discounts can help elevate your average order value.
Build Loyalty (Without a Loyalty Program)
Customers love feeling like they're getting a deal, and tiered discounts make them feel like they're winning. Combine these discounts with a loyalty program, and you've got a recipe for repeat business. Many brands, like Sephora, use tiered discounts to recognize their most loyal customers, ensuring they return again and again.
Create a Sense of Urgency
A time-sensitive offer can be incredibly compelling, especially when combined with tiered discounts. Announcing that your customers only have a couple of days to secure the next discount can definitely encourage them to spend more (and sooner).
Pro Tip: Adding a countdown timer or highlighting a limited-time promotion can significantly increase conversions.
Boost Your Average Order Value (AOV)
Tiered discounts increase AOV by getting customers to spend more. Think of it like this: You’re at your favorite cafe, and you figure, "Why not go for the large latte instead of the regular, it's just a little extra?" The goal is to get customers to spend on the next level without making them feel like they are overspending.
Personalization Through Data Collection
Every tiered discount transaction gives you valuable data on customer behaviour. Over time, you can use this information to personalize future offers and tailor discounts to individual spending habits. For example, suppose customers often stop just short of the $150 tier. In that case, you can target them with a special offer to nudge them over the line.
Inventory Management Made Easy
Tiered discounts aren't just about increasing sales—they're also great for managing stock. Have a bunch of last season's clothes still sitting around? Offer tiered discounts on them to clear inventory and make room for new products, all while maintaining decent margins.
Pro Tip: Use tiered discounts strategically to avoid getting stuck with overstock.
When to Offer Tiered Discounts (and When to Hold Off)
Tiered discounts can be a great way to boost sales, but they’re not always the best solution. Knowing when to use them—and when to hold off—can make all the difference in maximizing your profits.
Seasonal Sales
Tiered discounts shine during high-traffic sales events like Black Friday, Cyber Monday, or back-to-school shopping sprees. People are already ready to spend, so giving them an extra incentive to reach the next discount tier can lead to bigger orders.
Clearing Out Inventory
Need to get rid of those holiday sweaters in January? Tiered discounts are a great way to clear out stock without heavy markdowns. Set tiers that encourage customers to take more off your hands without cutting too deeply into your profit margins.
Loyalty Programs
If you’ve got a loyalty program, tiered discounts are a great way to show your repeat customers some love. You can create special tiers for your top shoppers, making them feel appreciated while encouraging even more purchases.
Service-Based Businesses
Tiered discounts aren't just for physical products. Service-based businesses can apply them to subscription models, service levels, or even package deals. The longer the customer commits, the better the discount.
