When to Discount and When Not Too?

By Ten Squared, posted on the 3rd of December, 2021 · 6 minute read

Discounting can be a slippery slope, the excitement around the boost in sales can begin to cloud your judgement and these sales may eventually dilute the value of your brand in the eyes of your customers. Establishing and retaining customers perception of your brand as a quality brand is vital, especially in Eccomerce where customers cannot go into a physical store to engage with your products and form a relationship with your brand through your staff.

So what's the danger with sales? Once your customers get used to your products being consistently on sale it can be hard to change those customers perception of your brand. Hence, retaining your image as a high quality and premium brand can be essential to the ongoing success of your brand and help reduce the cognitive friction customers may experience whilst checking out online.

How to sell without discounting?

There are a few core aspects that will determine whether you have a product and brand will sell or not. These are the quality, differentiation and a strong and inspiring story. Read on and we will break these down a little more.

Quality

The quality of your product is arguably the single most important aspect of your business. Even if you do manage to successfully sell low-quality products on a large scale there is no doubt that you will pay for the quality in other ways. Low-quality products result in more returns, they will increase the demand on your customer support team and result in increased spending on shipping. The quality of your product determines the quality of your brand, ensuring your quality is high will lead to free marketing through word of mouth and inevitably a business that is positioned to grow.

Differentiation

The differentiation of your brand has varying importance depending on the competition and demand in your space. If you have lots of incredible competition then differentiation is something you will need to rely on heavily. In short, differentiation is what makes your brand different and why should a consumer choose your brand over someone else's? Differentiation can be achieved in many different ways, "Thank You" achieved it by creating an authentic partnership with charities, "Who gives a Crap?" achieved differentiation in a similar way additionally promoting the ease of having toilet paper delivered directly to your door, this model also helped them grow their subscriber base which made interacting with their brand effortless and automatically reoccurring. In the clothing space, you have companies that promote comfort, style, sizing and inclusivity to help present their brands as brands you want to engage with. In essence, there is no right or wrong way to differentiate your brand, but you cannot become "just another clothing brand".

Inspiring Story

If you can package up your quality and differentiation into a single compelling story you can truly begin to build a relationship with consumers. This will help create a memorable brand. Is that it? No, having an inspiring and authentic story can help you receive free press, in fact, it is the easiest way new businesses are able to get noticed. Having said that, achieving free press with your inspiring story is not easy, but a compelling story partnered with the young success of your brand is far easier to write a story about than a brand that has made a few thousand in sales in their first month... Just imagine the headline "Store makes sales".

When should you discount?

There is a simple rule that you can follow to determine how much your brand should discount, that is, the more you discount, the less effective each discount will be and the larger the discount will need to be to bring about the same result. Hence, the more your discount, the more your customers will become reliant on these discounts and these very discounts can become counterintuitive.

Creating a discount for worldwide events like black Friday a few times per year can bring some great boost in revenue without cheapening your brand. Depending on how your brand fits into the market, you may be able to get away with up to five to six sales per year and the odd exclusive discount to valuable customers, however, there is a fine line between saying thank you to your customers and becoming "cheap".

Can I say thanks without a sale?

There are some great ways to say thank you to your customers without offering them discounts all year round. This can be through offering free shipping on orders over a certain value, offering free express shipping upgrades on certain weekends, offering small free gifts to customers who spend over a certain amount. All of these options allow you to offer extra value without devaluing your products in the eyes of your customers. Hence, you are not creating expectations for what the price of your product should be.

How often should I send my customers marketing emails?

Of course, leading up to a sale, of course, you want to let your customers know that they could get a really good deal. However, you should never be sending more than one or two emails per week, we suggest to our customers to keep it to around one email every two weeks. There is no better way to increase the number of users who unsubscribe than sending "Sale ends in 3 days", "Sale ends in 2 days", "Last chance, sale ends today". By the third email in 3 days, there is no doubt that those who have seen your emails are about to unsubscribe. Someone's email inbox is something that needs to be respected, it is often how people communicate with their friends and manage their lives. Of course, they dont mind being notified about different promotions, but this should be done to provide value to the customer and not fulfil a brand's own needs. When you reach the right balance you will be able to rely on your mailing list over time to consistently produce sales rather than losing 200 subscribers and potential return customers over one bad weekend of FLASH SALE emails.

Conclusion

A sale is an incredibly powerful tool and should be used as such. When anything powerful is misused it often leads to more harm than good. Creating sales too often will cheapen your brand over time the work your team has done to create the perception of value customers have of your brand. When promoting emails, do so intelligently and respectfully.

If you have any questions about the most impactful way to track the impact of your sales feel free to reach out to us at any time.