How to Effectively Offer Discounts to Your Customers
I’m not a huge fan of discounts. As a business owner, I put a lot of time, energy and money into developing the best content for my audience so it wouldn’t make a lot of sense to me to consistently discount the quality of information that I share.
Alternatively, I’ve come with a simple strategy to keep myself in check whenever I feel the urge to offer a random discount. I call it “The 2 and 20 Rule”. Basically, I don’t offer more than two discounts per year with no more than 20% off per discount. That way, I’m still offering something for my clients, but I’m also ensuring that I can reach my sales goals.
Constantly discounting your products and services will eventually cheapen your brand. Instead, create a sense of exclusivity and luxury by highlighting the quality of your offerings to validate your price points. So in this post, let’s talk about some pros and cons of discounting offerings.
Why You Shouldn’t Offer Discounts
You shouldn’t get into the habit of discounting your products and services because you’ll eventually create a pattern for your audience of expecting a discount at some point. For example, if you offer a discount for every single holiday throughout the year, you may only notice a significant spike in sales on those days as opposed to a consistent flow of sales throughout the year. Customers will be turned off by paying full price so they’ll just wait until another sale period to part with their hard-earned cash or rose, they’ll move on to one of your competitors.
When It’s Ok to Offer Discounts
When you want to celebrate or thank your local customers…
Valentine’s Day (February 14th) or a novelty holiday like National Customer Appreciation Day (April 18th) would be relevant days to host a sale that’s only available to a specific group of your repeat customers. For example, exclusively offer the discount to customers who’ve made a purchase within the last three months or customers who’ve spent a significant amount (over $250) each time they buy from you.
When you want customers to spend a significant amount…
If you want to increase the number of sales per customer, you can offer a small discount if people reach a certain amount in their cart. For example, you can offer a $25 discount on a cart of $200 or more.
When you’re still in production but want to build hype…
You can create a pre-launch campaign around your new collection and offer a discount to continue funding your production. Crowdfunding platforms are great ways to build awareness for your upcoming products and increase your sales. Try offering a discount during your pre-launch campaign and including a special bonus like an exclusive invite to your launch party.
When your brand reaches a significant milestone
Whether your brand is celebrating an upcoming anniversary, reaching a certain amount of Instagram followers, or opening a new retail space, a flash sale (24 to 48 hours) might be just the thing to boost your revenue. Tell an engaging story about your milestone and be sure to thank everyone who got you to that point.
Keep These Discounting Tactics In Mind
The following tactics help your customers push past the resistance of hesitating when pushing the “Purchase” button. Try them one at a time or all at once.
Anchor your regular price point to your sale price. Use anchor bias to your advantage since the discounted price will seem relatively more affordable to your customers.
Create a sense of FOMO (fear of missing out). In regards to time, use phrases like “limited time only”, “flash sale”, and “today only” to make sure customers know that your special offers are limited. And in regards to the number of products or services available, phrases like “while supplies last”, “low stock” or “only # spots left” can work.
Plan out your discounts for the year. While organizing your monthly, quarterly, and annual sales goals, determine when you’ll offer sales in correlation to brand events like pop-up shops, fashion shows, or brand milestones. That way, you’ll have time to properly organize every aspect of your discount offer to meet your customers’ needs.
Be Mindful of “The Rule of 100”
As explained in the Practical Value chapter of Contagious: Why Things Catch On by Jonah Berger, make your discount seem bigger depending on the amount of the discount. For example, if you’ve discounted a belt from your latest collection to $15 from $20, you could display that discount as either “$5 off” or “25% off”. Since the “25% off” offer sounds bigger, you may get more sales as opposed to advertising it as “$5 off”, even though it’s technically the same discount.
However, if your pricing is $100 or more, a dollar amount discount sounds larger than a percentage discount. For example, a dress with the original price of $395 would probably sell better with a “$60 off” discount offer rather than “20% off”, even though it comes out to the same amount.
Need Some Discounting Examples?
If you’re a stylist who specializes in developing capsule wardrobes and organizing closets, try offering your discounts at the beginning of the spring and fall seasons.
If you’re a swimsuit designer who is currently producing your next collection, offer a pre-launch sale in January in correlation with your customers setting their New Year’s resolutions.
If you’re an accessories designer who specializes in high-quality, minimalist pieces, offer your discount around Black Friday or Small Business Saturday to be shipped in time for your customers to wear at holiday parties.
Whenever You Feel the Urge to Discount, Do This Instead…
Focus on your customer experience. Validate your regular pricing by increasing the quality of your customer service. Tasks like responding to emails and DMs within 24 hours or paying attention to your packaging process will make your brand seem more luxurious.
Make the experience worth the cost of your offerings. If you’re a service-based business, learn to develop better communication skills to ensure that you’re always listening to your clients and meeting their needs in a timely manner.
Solve pain points for your customers. Show how your experience can help your customers save time when solving a specific problem. Basically, your customers are paying for the convenience of using your products and services to improve the quality of their lives.
Comment Below
Now that you’ve got all the details you need to set up your discounting strategy, when do you plan to offer a discount to your customers?
