The perils of reactive discounting

There is a discounting epidemic. On the high street. Online. The needless handover of sales profits. The 10% discount code presented to website visitors before they even begin to shop. The half price summer sale. The clearance where everything ‘must go’. Profits are being haemorrhaged. And once you head in this direction, it’s a challenging trend to recover from.

The actions contradict the ideals of today’s retail marketer

In Adobe’s 2018 Digital Trends in Retail report 26% of retail leaders listed improved customer experience as their go-to method for driving differentiation and growth. Just 4% listed price as their key differentiator (a drop from 7% in 2017).

So why are we seeing the proliferation of summer sale signs? 60%, 70% discounts on unsold stock in an attempt to woo customers?

  • The weather?
  • The tightening of belts?
  • The world cup?
  • Brexit?
  • The actions of the competition?

We all have our excuses at the ready to address any unanticipated downturn in sales. When hauled into the boardroom we have to be pretty damn sure that there’s an explanation, always outside of our control, that has impacted our ability to sell (and our likely ability to hit the forecasts we predict).

The problem is the ideal of ‘improved customer experience’ is embedded into long-term strategy. Pricing wins short term. It gets numbers on the board when you need them… like right now.

Excess stock needs to be sold

You need to release cash from unsold stock. So you price to move quickly.

It’s not a new fad. It’s an age old tradition in retail. Get rid of the old to make way for the new. Make a best guess in terms of volumes for seasonal stock purchasing or manufacturing and the cycle continues.

Remember when RRP used to mean something?

To counter the heavy discounting we bloat RRP. It’s a cheeky method. We all know customers love a discount, so why not artificially create a discount?

Because it creates confusion and oftentimes resentment

Why should I buy now knowing that the product will be discounted later?

Nothing is more frustrating for your customer than purchasing for £x and seeing the product available for £x-50% in a weeks time.

The problem with heavy discounting

It’s not just your own discounting that cause this frustration. It’s the discounting epidemic in general. As an industry, we’re creating distrust.

Where does this leave us (with our goal of greater customer experience in mind?)

A better customer experience isn’t just a tickbox on our brand wishlist. It’s an integral piece of our growth strategy. Customer experience means different things to different people and different propositions to different brands.

It’s a composite.

The greater my trust in your brand, the better the experience shopping with your brand. It goes without saying.

Trust links back to the fear of buying to only then see the product discounted at a later date.

Inconsistent discounting creates distrust.

So, what to do about discounting

You build a better brand.

A more likeable brand.

It sounds like generic advice, but it really isn’t.

If you’re forming connection with your customer above and beyond pricing they see the discount sale as a thank you statement, not a cause for concern. It doesn’t detract from future purchasing at full price. Why? Because you’ve built that bond.

Take Marine Layer as an example. There is tremendous consistency in their tone and brand vibe. You can’t not like Marine Layer. So, when they email to explain they’re running their ‘twice a year surplus sale’ where you have to ‘get it before it’s gone’. Even down to the discount code, ‘CHACHING’, the presentation is clear and fun.

This isn’t blanket discount, this is strategic shifting of surplus stock. This is the value of presenting ‘new season’ vs ‘old season’ stock. The sale won’t stop people shopping when new stock drops.

Ad for surplus sale

Don’t believe the discount hype

It’s not ‘everything must go’ it’s ‘this limited stock must go’. Give people an understanding of what you’re selling and why you’re selling. Separate old from new.

Too often, in general retail not just fashion, there is a blurring of the lines between the old and new. New is where you create demand. With new you market deep. You get behind your product and have the confidence to use scarcity to your advantage. Even at RRP. If have to be creating demand for that particular range or product. You know this won’t hit the clearance bucket, so you give it your creative all.

At the same time, there are ‘those’ products that create doubt from the outset. The products that will, inevitable, hit the discount bucket. They’re there to create product depth, not products you’d refer to as your flagship stock. They meet a certain taste that you doubt will whet the appetite of your mainstream customer. You have that sixth sense.

Maybe you don’t have to discount at all?

Customers love freebies.

Take a recent offer from Field Notes:

Customer freebies can be better than discounts

The incentive is there. Purchase (at RRP) and you’ll receive an added bonus. Something that you know people will actually add value and create demand.

Again, look at the copy. It’s conversational. It’s how we talk. People to people.

The key to all this talk of discounting?

Shift away from the random ‘we’ve had a couple of shitty days, let’s put the coupon codes live‘ mentality. Plan what you discount. Plan how you discount. Then have fun telling your customers about what you have in store for them.

Remove the template ‘sale’ jargon. It doesn’t work. That includes the ‘our sale is so popular we’re going to have to run it FOR ANOTHER DAY!’ You think people really believe you?

Discounting may be a necessary part of your product’s lifecycle. So define your discounting strategy. Actually plan ahead. Get the start date and the end date in the calendar. Get your savviest writers on the case. Make it an event, not a reaction to the marketplace.

Those products that you know you’ll never discount? Why not let your customers know? Include a ‘price promise’ within your product description. Remove any unease when it comes to the fears customers may have about pricing haphazardness.

Don’t be thrown into a state of panic because of the actions of others in your industry. They’re less prepared than you. They’re firing the brown stuff at the fan. Your approach? Be strong. Be prepared. Be the brand less ordinary.

 

 

 


Written By:

Ian Rhodes

Twitter

Conversion Strategist. Helping store owners and in-house marketers build their ecommerce business (without trashing prices).


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