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I’m getting questions about our podcast episode on the downside of discounting for ecommerce brands. BFCM is right around the corner, and we all know how prevalent discounting is going to be, so this feels like a good time for a 
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First, let me make my position clear – discounting is NOT conversion optimization, it’s margin drain. Here’s why it’s bad for business…
Most brands who run discounts THINK they are increasing sales and improving conversions, but their approach is near-sighted.
What they are doing is establishing themselves as a "discount brand" in the eyes of consumers.
You see these in retail stores like Kohls or Michael’s or Bed Bath and Beyond. There is ALWAYS a sale running, because they have built their brand on providing the best deals.
The problem with this is consumers eventually learn to wait out those 10% and 20% sales, because they KNOW that a 30% or 40% sale is coming soon.
I mean, I’ve walked into a Bed Bath and Beyond and said, "Aww I forgot my flyer with the coupon on it. Any chance you’ve got one I can use?" I didn’t forget anything, I just KNEW they had some kind of storewide sale going on. Because they always do.
When I shop online, I almost always abandon my cart, because I know I can save 10-20% through that abandoned cart email. Or that exit intent pop-up. Because they are ALWAYS going to be there.
And that’s not just because I work in ecommerce.
Your average consumer has been trained to do stuff like this too.
Your average consumer has been trained to do stuff like this too.
Or they see that "discount code" field on your checkout form and what do they do? They leave the page to go search Google or one of those deal aggregators for a better price. What happens if they don’t find one?
So, while discounts may be effective in the short term, they are almost always detrimental over the long haul.
I can see why it’s tempting to default to discounting. It’s easy to set up. It makes customers feel good.
It gets more first-time customers in the door. What’s not to love?
It gets more first-time customers in the door. What’s not to love?
Here’s the problem... once you’ve taken that position, it’s really, really hard to get off of the discounting hamster wheel.
You end up in this vicious cycle where customers refuse to buy from you at full price, even if your product is worth every penny you’re asking for. And that’s a huge problem.
Now, you might be asking yourself, "What should I be doing instead then, mister smarty pants?"
Well, you’re in luck, because I’m about to tell you...
Well, you’re in luck, because I’m about to tell you...
Instead of defaulting to discounting, I’d love to see more brand owners and ecommerce leaders think in terms of promotions. And before you say it, discounting and promotions are NOT the same thing. Here’s why…
A discount directly reduced the price of a product that intrinsically has higher value. That’s bad. A promotion is an offer that incentivizes a purchase by adding MORE VALUE for the SAME PRICE. See the difference?
One is focused on reducing the cost for the customer and one is focused on increasing the value for the customer. One protects your brand and your margin, while the other one diminishes it significantly.
Here are some examples of promotions that I’ve seen run successfully, and why they are better than a direct discount on price…
Threshold for Free/Expedited Shipping – Incentivize customers to hit a certain cart value to earn free or expedited shipping.
This is especially good for bulky items that have hefty shipping costs.
This is especially good for bulky items that have hefty shipping costs.
Limited Quantities/Exclusive Products – DO NOT FAKE THIS. That’s gross. But if you truly have limited quantities or exclusive collaborations, emphasize that to your new and existing customers.
Free Returns/Money Back Guarantees – Trust is a huge motivator for purchases, especially for people who are on the fence about their decision. If you can remove the risk, you can earn their business without cutting your profits.[...]
Buy One, Get One – Everybody loves a good BOGO, right? Sure, this ends up eating into your margin too, but it helps you avoid making price the only incentive and protects your brand. It also increases your average order value.
Free Gift With Purchase – This can also reduce your margin slightly, but it’s a great way to introduce customers to other product lines (Ex: Free eye liner with purchase of eye shadow) and makes customers feel special.
Escalating Discounts For Loyal Customers – You could reserve discounts only for customers who are making a repeat purchase. Give them your best rate, because their lifetime value is already through the roof.
If you want more examples of these, we’ve got dozens of them (seriously) available right here 
https://thegood.com/insights/essential-ecommerce-promotion-guide/
https://thegood.com/insights/essential-ecommerce-promotion-guide/
This thing is getting pretty long, so I’ll wrap it up with a few actionable steps that you can take if you’re already stuck on the "discounting hamster wheel."
First, look at your marketing calendar for the next 6 months and identify a few places where you can swap out a price discount with one of those other promotional ideas I shared.
Aim to replace them entirely in the next year.
Aim to replace them entirely in the next year.
Next, hide the discount code field on your checkout form. The mere fact that is visible and empty makes people want to fill it with something, and I guarantee that’s costing you sales.
If you’re going to offer price incentives, create single-use discount codes or personalized email links that automatically apply the discount in the cart. That way you avoid getting added to those aggregator sites I talked about earlier.
Consider moving your discounting strategy to a loyalty program. Only folks who are "super shoppers" qualify to receive discounted rates on all future purchases.
This increases CLV and rewards the folks who have ALREADY supported you, not lure in people who aren’t customers yet.
In the end, my goal isn’t to convince you that “discounting is the devil.” All I’m saying is that strict price or percentages discounts are oriented around negative things – reducing cost, reducing margin, reducing perceived value.
Conversely, promotions are oriented around positive things – expedited shipping, free gift with purchase, money back guarantee. They increase the value for you AND your customers.
If you’re running a BFCM discount, I don’t blame you.
But I hope that you’ll consider swapping out some of your other discount campaigns for promotions instead. The numbers might not long great in the short-term, but long term you’ll be better off.
But I hope that you’ll consider swapping out some of your other discount campaigns for promotions instead. The numbers might not long great in the short-term, but long term you’ll be better off.
Whew! I’m going to wrap it up there, but if you have any questions hit me up here on Twitter. I’m an open book. And if you want to hear my original rant, you can get that here: https://www.driveandconvert.com/16
