Discounting is one of the key tools in a retailer’s toolshed. Need to boost sales? Cut prices. Need to offload some old stock? Sell it at a reduced price. Want to tempt new customers in? Offer them a welcome discount.
But what if you’ve become addicted to discounting? And more importantly, what if your customers are wise to your discounting tactics? Then you can get stuck in a situation where your customers are just waiting for a sale, and never buy anything full price.
For example, I bought some clothes from a retailer a year ago (I’m ashamed to say, not an Ometria customer). Now I get an email every day, and most days there is a reference in the subject line to a discount. Here are some examples from the past two weeks:
- Want 50% off.
- 30% off – ends tonight!
- You’ve unlocked a bonus discount
- Flash sale – ends midnight
There is something of The Boy Who Cried Wolf about the insistence that these discounts end soon. I know that in a couple of days at most, there’ll be some other discount. The discount incentive has lost all power for me.
On the other hand, there are certain brands who use discounts sparingly, and if they sent me a code for 20% off, I’d take it like a shot.
Marketing Week recently wrote aboutbrands that were trying to get themselves off the constant discount cycle. In it, Superdry and Gap were both mentioned as brands who saw some of their brand value (and margin) erased by self-inflicted discounting problems, and were taking steps to get away from this vicious cycle.
At Ometria, we don’t think that retailers should stop discounting altogether. Instead we think that retailers need to be more intelligent about discounting and use it more strategically, rather than doing frequent batch-and-blast emails with blanket discounts to try and get a short term boost in revenue. But how can you wean yourself off this discount cycle, or avoid the trap altogether?
Rewarding loyalty
One option is to straight away switch your discounting approach from blanket sales to all your customers, to a reward for your most loyal shoppers. If you have a dedicated loyalty program this can be the mechanism by which you deliver these rewards. But even if you do not have a program, if you can identify your most valuable and loyal customers you can still target them with special discount codes.
This has the benefit of providing incentives for customers to become long-term customers and to buy more frequently. This also gives you the benefits that come with discounts but in a more limited and targeted way, and are more likely to lead to further repeat purchases from your loyal customers.
Pick an occasional time for discount
If you still have a need to get rid of stock, or to boost sales, then if you limit your sales period to a specific time, then you can still get rid of stock. This is nothing new, with Black Friday, Christmas, January, Summer all being known times for sales. But if you pick both a very specific time, and one that is thematically linked to your brand, you may be able to offer smaller discounts as well as get more attention when you do choose to discount.
Take Elvie, a brand focused on motherhood. For Mothers’ Day in the UK, the brand offered a discount over this period, knowing that it’s not a common occasion for discounts, but that it’s one that fits very closely with its brand purpose. It’s not the biggest discount you’ll ever see, but a rare 10-25% off is very welcome if you’ve got your eye on one of their products.