Discounts are a go-to sales tactic for the vast majority of brands. Dig around a bit, and there’s a good chance you’ll find a % off your first order or a limited-time sale lurking somewhere on every ecommerce website.
And it makes sense: discounts are a hit with shoppers.
Obviously, people love getting money off, but while it can attract new customers, there are downsides to discounting your products. For starters, you might not attract the right customers; instead only luring in frugal shoppers on the hunt for a deal. Secondly, your brand is so much more than your discounts. Your products are great, and slashing their prices can make shoppers think twice about the quality of what you sell.
So what are your options? Discount or don’t?
Why offering discounts is so common in ecommerce
Almost every ecommerce brand today has a discount in some form or another. For apothecary brand Firsthand, it’s 10% off your first order.
For Crate & Barrel, it’s a big winter sale promising up to 60% off products.
But why are discounts so common?
Because everybody wins (or, at least it seems that way). The customer gets some money off and the brand gets a new customer. The math is simple. It can also be an effective way to push on-the-fence shoppers off the fence and stand out in a crowded market.
Think about it: if a shopper is choosing between two very similar skincare brands and one is overtly offering them a cheeky bit of discount, chances are they’ll go with that one. It doesn’t mean they’ll stick with that brand though, and it certainly doesn’t mean that the brand is a good fit for them.
But you can see why merchants jump at the chance of offering discounts. It’s an easy way to boost revenue in the short-term and attract new customers in bulk.
Discounts can come in many shapes and sizes, but most commonly you’ll see:
- Seasonal discounts: like winter sales and holiday offers
- Promotional discounts: like 10% off your first order or money off a freshly launched product Â
- Volume discounts: money off when a shopper buys in bulk
- Abandoned cart discounts: a percentage discount when a shopper goes back to their abandoned cart and makes a purchase
- Loyalty discounts: money off for returning customers
The pros and cons of offering discounts
We’ve touched briefly on the pros and cons of discounts (namely that the biggest pro is converting new customers and one notable con is that discounts might not attract the right customers). But let’s dig deeper.
The pros
- Shoppers spend more: customers who use coupon codes spend 24% more than customers who don’t
- Increased AOV: 29% of shoppers will add a product to their cart if it’s heavily discounted even if they didn’t originally intend to purchase it
- Brand awareness: the more people who buy your products, the wider your reach as a brand will be
- Meet sales goals: the influx of revenue from discounted sales can help you reach short-term sales goals
- Free up store room: discounts can help you get rid of old stock and free up space in your store room
The cons
- Lack of trust: shoppers will lost their trust in you if you’re constantly discounting prices – especially if they paid full price for a product
- Fickle shoppers: consumers that snap up deals aren’t always the consumers you should try and target if you want to build a loyal following
- Focus on price: your products could be the highest-quality in the world, but if you’re discounting them the focus is always on price
- Lower perceived value: shoppers may start to consider your products as less valuable than competitors if you constantly discount them
- Smaller profit margins: your products still cost the same to manufacture regardless of how much you sell them for, so discounting can dramatically cut into your profit margins
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How to sell without discounting: 5 effective techniques
If you don’t want to take part in the race to the bottom, you don’t have to. There are plenty of other ways you can promote and sell your products without slashing the price on them every other day.
1. Cause marketing
Cause marketing promotes your brand values and missions, helping you connect and align with likeminded customers. Today, more shoppers than ever seek out brands that share the same beliefs as them, and many are willing to pay over the odds to purchase from brands that stand up for what they believe in.
The Body Shop has always been vocal about its position on animal testing. In 2018, they ramped up their efforts with their Forever Against Animal Testing campaign and generated eight million signatures to end animal testing in cosmetics around the world.
In addition, the campaign encouraged customers to only buy products that were stamped with the Leaping Bunny logo (which, of course, all The Body Shop’s products do).
2. Loyalty programs with non-discount rewards
Loyalty programs reward long-standing customers, not one-time buyers who take advantage of a discount and then disappear into the sunset. Rewarding the people who continuously come back cements trust and loyalty, building an even stronger brand following.
Anthropologie’s AnthroPerks program lets loyal customers unlock different rewards without a discount in sight.
They can get first dibs on new products, grab a birthday treat, secure free shipping, and download the exclusive Anthropologie app.
3. Don't offer too many SKU's
Selling thousands of products might seem like a good idea (safety in numbers, an’ all), but that means more marketing campaigns, wasting stock that doesn’t sell, and muddying the overall purpose of your brand by having your finger in too many pies.
Instead, create a business around a handful of evergreen products that you become known for. Razor brand Estrid has forged its own unique path in the healthcare industry and is renowned for selling one thing, but selling it well.
In fact, the brand’s product catalog consists of just seven items: a starter kit, a razor case, razor blades, body oil wash, body lotion, shave cream, and socks.
4. Premium branding
Instead of trying to stand out by slashing prices and coming in cheaper than your competitors, focus on making your products stand out in other ways. Creating eye-catching branding that’s colorful and reflects your brand personality is a great way to stay memorable and front-of-mind.
One study found that there’s a very strong correlation between the design of a product’s packaging and shoppers’ perceived value of the product.
Arlo Kombucha has created a bold seventies style packaging design and has committed its marketing campaigns and social content to follow suit.
5. Cross-selling and upselling
Cutting prices can lead to less perceived value, so why not add value? Cross-selling or upselling are effective tactics for getting lesser-known products in front of your customers and ensuring you’re providing them with as much value as possible.
If a customer has just bought a camera from you but it doesn’t come with batteries, cross-selling them a bunch of batteries at the point of checkout will eliminate that “oh no!” moment when they unbox their new arrival. It shows you have their back and understand what they need, which brings them closer and boosts those all-important loyalty levels.
Aesop is great at offering cross-selling suggestions to customers. Chances are, someone who’s buying a new razor is going to want shaving cream and a brush to go with it.
Remember, upsells and cross-sells should be relevant to the original product. If someone’s buying a camera, they probably aren’t going to be interested in a shaving brush – well, they might be, but the chances are very slim (this is why it also helps to have a limited selection of SKUs, too!).
Create your first cause marketing campaign with Givz
We’ve harked on enough about how discounting can be detrimental to your brand, but what are your next steps? Givz lets you offer customers the chance to donate to charity at the point of purchase, which means you can show off your beliefs and values from the get-go. Choose a cause your brand is passionate about and encourage customers to donate rather than get a discount. You’ll find a better-aligned customer base, drive sales, and increase AOV all at the same time, without any whiff of a discount in sight.
