Don’t discount the idea…
It’s been some time since my last one, but I think it’s time for another of my little rants 🙈 and this is one about marketing but more specifically one of my little bugbears – discounting.
Now, don’t get me wrong, I think discounts are great, I use them and I’m guilty of waiting for an abandoned cart discount when shopping with bigger brands (I’d never do it with smaller companies as I know how tight margins can be). I think that discounts are often the difference between a first-time purchase and no customer for some people – especially with larger ticket items. However, there are several times when I think that discounts are a bad thing (yes I said it, sorry!) and here’s why:
· The can is open and there are bargain hunters everywhere – when you do deep discounts or use sites such as groupon or wowcher you are putting out a signal to all the bargain hunters out there, you’ll get people through the door but at what cost? They won’t be repeat visitors as they don’t value your service/product at its full price and they have no brand loyalty whatsoever.
· Making a rod for your own back makes it hard to sleep – If you attract new customers with discounts (large or small) you are showing them that your product/service is not actually worth what you are asking. Discounts that are readily available (not given in return for anything) are you saying that your product/service is worth 10/15/20% less than you are selling it for and what kind of message is that? If your customers can’t see the value, they won’t ever pay that full price and that negates the LTV of that customer.
· It’s like shouting into a storm: no one will hear you scream – if you are always shouting offers then the important changes such as new products or clearance lines or a genuine value giving offer won’t stand out. There’s no way anyone can pick that gleaming needle of an offer out of a haystack of discount noise.
· The tortoise beat the hare so slow the heck down – stacking them high and selling them cheap is certainly one way to do it and that is a model that works in some sectors really well but if you are trying to build a long term, sustainable business with repeat customers who have a high LTV then you need to build a relationship with them based on trust, efficacy and customer service and that’s not done with quick win discounts and quicker sales
· 1 star however bright will drag the rest right down – there’s no way to put this politely but often those looking for cheap are quicker to complain. Because they’ve not engaged with your brand and your product/service before, perhaps buying direct from an ad then they maybe don’t really get what you do/who you are and that can lead to negative reviews. However good the rest of your customer reviews are it’s always the low ones that stand out.
So how can you discount and make it work? Well as I said I do think they have a place and there are some great ways you can use (small) discounts to build your customer base and create a community that will continue to come to you for years to come. Here’s a few suggestions for just that…
· I love you, thanks for coming back - reward loyalty from your customers with discounts and offers and this creates happy customers who want to spend more with you
· Flutter your lashes and a bit of ankle – welcome discounts are great for bringing people on board, just helping them to make that decision but do it in response to something, like an email sign up, so that you can remarket to them and increase their value to your business
· Get to second base – ramp it up a little with a slightly higher follow up/abandoned cart discount that just pushes those fence sitters over the edge, provided you are confident that they you can wow them with the product/service and make the loyal, full-price paying customers going forward
· Stimulate the sales – use celebrations/one off situations or event to create discounts, using these for your existing customer base makes them feel special and helps drive further repeat business, what’s not to love about that!
So that’s my 2p on discounts – that a full price 2p, you’re not having anything off!