Avoiding the Perils of Continuous Discounting

Mary Steinford
Mary Steinford
Guest Contributor

Today’s shoppers simply do not trust continual price cuts, and there are various and far more effective ways of keeping revenues and profits up without resorting to persistent sales and discounts.

Are you seeing profits plummet? Just slap the “sale” label on them and you’ve got yourself a spike in sales!

Unfortunately, too many retailers, both online and off, make price promotions their primary marketing strategy when it comes to spurring sales. However, this tactic often doesn’t work well – for both parties. Your shoppers and customers won’t come in as huge a crowd as they once did, and you won’t profit from discounts.

Why discounts aren’t appealing anymore

Have you noticed your discount participation has dropped? And, the sale spikes you do have do not translate to long-term success? Here are a couple of reasons why this can happen.

Discounts are everywhere

Long gone are the days when you could dominate the market by offering a discount on a product. This strategy is now so overused it is often completely devalued in the eyes of consumers.

The best way discounts work is by being exclusive – you offer a bargain that shoppers won’t find elsewhere. Then, a sense of urgency kicks in, and shoppers take action to buy in the moment.

Too often now, that feeling of exclusivity is gone. If an alien arrived on Earth and spent a year here, it would soon learn that if one can wait a couple of months on any fashion collection, the brand will sell it at a huge discount. So, what’s the point of buying it on the day it’s out?

It’s a no-brainer, and most people have long figured it out. Discounts are everywhere, and shoppers don’t have to rush with a purchase. They can always get a discount elsewhere, or at a later time.

You devalue your product

Now, try to imagine yourself in the shoes of your most loyal customers. Once you drop a new collection, they rush in to buy your clothes. They love your product for what it is and don’t need a discount to buy it. They see value in your product.

What if a loyal customer visits your website or store in a month’s time and sees that the nice outfits he paid $200 for now cost only $100? He’d feel betrayed. Why would his favorite brand force him to overpay when it could later afford to sell those same products at half the price?

As a byproduct of repeated discount pricing, even your loyal fan base doesn’t see much value in your products anymore. Imagine what ordinary shoppers think. There’s no reason for them to buy your products now because you’ll eventually put them on sale.

Once you start selling at discounts, you lead your brand down the path of devaluation. You may as well consider cutting all your prices from the very beginning.

Shoppers know what you’re doing

Whether it’s the spread of pop psychology or just learning from observation, people know the purpose of discounts. They know it’s not just a treat from a brand. Most people understand that you wouldn’t be able to sell the product if it were not for the discount.

This makes the value of any discount they see much lower. The problem is in how retailers deploy discounting strategies. It was so effective for short term profits that we moved from offering a discount for liquidating the last items in stock to using discounts as a viable marketing strategy.

As a result, many shoppers know what you’re doing and will buy products spontaneously less often.

Discounts bring in the ‘bad sheep’

If your strategy is slapping the “on sale” label on any item that doesn’t sell as well as you want it to, you’re draining your business of customers. The good ones stop trusting your pricing policy, and the bad ones come in bunches.

This is especially true if you constantly have discounts or are present on many coupon websites. Position yourself as a discount hub, and you will invite bargain seekers, those shoppers who will only buy if there’s a discount. They don’t see value in your product per se, just in the discount itself.

Some niches are less susceptible to this than others. If you’re a paper editor company where quality is crucial and the niche is small, you’ll attract fewer of such customers. If you’re selling beauty products, you just invite failure with continuous discounts.

It’s bad for you

The bottom line is you often can’t get more customers to buy your products with persistent discounting. They don’t feel discounts are worth it anymore. Neither should you.

While this strategy shows some short-term success, you won’t see any long-term profits from it. Worse even, you will see total sales and profit plummet as you destroy the value of your brand with your own hands.

Your customers don’t think discounts are great. It’s time to learn from them.

When to use discounts

Sale pricing used to work, primarily because it created a feeling of urgency. It’s only when shoppers know they are not going to get a particular deal later that they’re going to buy.

The other thing that works with discounts is a feeling of uniqueness and a feeling of getting a real deal. Some people pride themselves on getting a product they want for the lowest price possible. They feel good about it because nobody else can get it. They’re unique.

Today, discounts are far from being unique. They’re somewhat universal, and they’re taken for granted by shoppers.

But discounts can still work. When smart consumer brands introduce a new product to stores, they roll a marketing campaign, rent premium shelf space and offer special introductory pricing. The product is on sale, so lots of people try it.

Then, when the initial stock is sold, the product is taken off the shelves. Shoppers, however, still look for it. Once it’s back on the shelves, they’re eager to buy it at the regular price.

Here’s how you can use discounts old-style to make them work.

Make the first touch

Discounts used to be a way of getting new customers to try your product. If the product was great, customers tended to come back.

Well, this doesn’t work if you present all your products at a discount on a coupon aggregator. Why would a shopper buy something for a full price if she can always return later and buy it at a discount?

Be smart when you are making the first touch. Minimize the number of products first-time buyers can purchase at a discount. While they’re at it, make sure to take their contact information so they know you can help them down the sales funnel.

Finish the sale

Lots of people fill up their carts and/or wish lists but do not proceed with their purchases. Even more people want to buy something from you but are waiting. Maybe they’re considering a different brand, maybe they’re saving up if you sell expensive products. Maybe they’re waiting for a special occasion.

Regardless, give them a reason to buy. When your shopper adds a product to her wish list, she may need just a slight push to make a purchase. Email her and offer a small bargain. You may succeed with as little as a five percent discount.

Make certain you know your customers’ birthdays so you can congratulate them by offering a bargain on something they’ve wanted for a while. This creates a sense of personalization and uniqueness other pricing discounts lack.

What to do in place of discounting

There are ways to grow your sales without discounts. Here’s what you can do if you want to end the discount disaster for good.

  • Offer a gift. Discounts tend to devalue the worth of your product in the minds of shoppers, but they are not the only bargains you can offer your customers. Gifts do not have the implicit messaging. Try offering an inexpensive product relevant to the purchase you’d normally offer a discount on.
  • Engage in influencer marketing. In this era of social media, consumers trust other people’s accounts of buying and using a product. Negotiate a deal with influencers to mention your brand in their work, and offer gift and incentives to influencers and customers who refer customers to your brand.
  • Differentiate. Discounts are often meant to bring in new shoppers, but the problem is they inevitably leave, either after making or purchase or not. Work on differentiating your products and services from competitors and communicate your value proposition in your marketing outreach campaigns – it may be a wiser decision than devaluing your brand by repeated sales.

You can see now there are various and far more effective ways of keeping your revenue and profits up without resorting to continuous sales and discounts. Shoppers simply do not trust continual price cuts nowadays.

Establish a system that will appeal to the shoppers and keep the money flowing at the same time. Study the target audience and work with the trends instead of clinging to the old discounting system in a desperate attempt to attract people to your shop.

About the writer: Mary Steinford has been a bookworm since a very young age. For that reason, she dedicated herself to creative writing, and her daily routine consist of novels, articles, news releases and book reviews. There is nothing more inspirational for her than the opportunity to investigate a new topic.

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