Why You Should Stop Discounting Your Products and 4 Things You Can Do Instead to Drive Sales to Your E-commerce Store!
Doesn’t everyone love a good deal? When it comes to increasing sales in e-commerce, most online store owners think that a discount or special promotion is the way to go. After all, lower prices usually mean more buyers, right?
Well, sort of.
Too much of a ‘good’ thing is usually a bad thing. And not only will those spikes in sales be short-lived, discounting can also have some long-term negative effects on the success of your online business.
Though discounts have their place in online retail, things can get really sticky, really quickly if you don’t avoid some common pitfalls that come with the landscape. And frequency plays a huge role in that.
So first let’s go over why you should stop discounting your products.
DISCOUNTS LOWER YOUR BRAND VALUE
Before we continue, we have to explore the relationship between value and price. Value is all about customer perception, what they interpret from what you communicate about your brand and products.
Price is all about cost, what goes into making, shipping, and marketing those products (and your profit from those activities). By running frequent sales, you’re subtly communicating the message that your product isn’t worth the price on that ‘buy now’ button.
This causes your customer to doubt your value. They’ll start to question your brand internally: “Does that mean it’s not worth that price?” “Is it even worth this new price?”
And for many shoppers, perception is reality. Why risk it all for a quick sale when you can stand by your value and gain a life-long customer?
DISCOUNTS REMOVE URGENCY
You’re a customer too. If you know that a brand you shop from has a sale at the end of each month, wouldn’t you just wait? Frequent discounts, even if they’re not as regular, condition shoppers to bide their time until the next sale. So not only are repeat customers taking longer to get back into the sales cycle, they’re also paying a fraction of the price when they do return. That means you’re making less and less money on each transaction. Which means that system won’t last very long.
DISCOUNTS MAKE YOUR ‘FULL PRICE’ SEEM UNREASONABLE
“Why should I?” That’s what customers start to think when sales are frequent enough. They start to expect the bargain instead of being pleasantly surprised by it. Now, you have a situation where you’ve invalidated your ‘full price’ option and customers feel stupid for buying your products when they’re NOT on discount. I can’t think of anything scarier *shudders*. The worst thing you can do is make a customer feel stupid for buying something at a lower value. And it can start to taint their experience with you and call into question whether your pricing is even fair.
DISCOUNTS CAN ALIENATE YOUR LOYAL CUSTOMERS
You know what it feels like to buy at full price only to check in a day or week later to see a surprise sale or new customer promotion running. Customer loyalty is a fragile thing which makes it all the more precious to your brand’s long-term success. Don’t sacrifice those who stick by you for some new eyes.
Now, of course I’m not suggesting that discounts can’t help your business but before you throw them around, be sure to determine your intent for the promotion and where it fits on your overall goals.
Something like a clearance sale to make room for new merchandise is perfectly fine because the name of the promotion sets the expectation that it’s a one-time thing (allowing you to radically slash prices without devaluing your brand)—as opposed to going back and forth between your regular price and different discounted rates.
It’s always recommended to have a promotional calendar to streamline your decision making and know what should be selling and when.
The lesson here: discount with caution. And now for the good news!
There are great alternatives to discounts that can drive sales without sacrificing value. Here are some of my favorites:
BUNDLE, BUNDLE, BUNDLE
Instead of offering a discount on a single product or SKU, package complementary products together—incentivizing a larger order value with some savings built in. And be explicit! If the customer will save $10 by ordering the bundle instead, make sure you promote it. That’s the way customers feel like they get more ‘bang for their buck’.
ADD MORE VALUE
Things like free expedited shipping or a gift with purchase also contribute to that value perception. Customers should feel great about each shopping experience. Getting something faster than expected, adding a free gift or even a special discount code to incentivize their next purchase are all things that improve the shopping experience at checkout. Which makes them more likely to come again (and much sooner at that).
LOWER YOUR COSTS
If you vendor has some flexibility (or if you can flex your negotiating muscles), think about ways to lower your costs (without affecting your product’s quality). That way, you can pass those savings onto the customer. And as always, announce it! Customers should know that they’re benefitting from your efforts instead of lower prices ‘magically’ appearing on their screen. It’ll show how much you care about them and ingratiate your brand when shopping time comes around.
OFFER A FREE TRIAL OR MONEY-BACK GUARANTEE
Look at your best-selling products and if possible, create a sample size version. You can have new prospects simply pay for shipping, making it a relatively risk-free transaction for something you’re confident they’ll come back for and purchase at full price. It’s a great way to lower the barrier to entry while still making a bit of money at the same time. And it brings someone from a lead to a customer just like that—no matter what they pay to get there. Those transformations are important in e-commerce and you can keep building on that first exchange.
Money-back guarantees are also a great show of confidence. Again, lowering risk when shopping online is key for first time customers. Being able to trust that they’re covered in the event they no longer want the product adds that extra bit of security and comfort around the purchase.