Do you still turn to discounts to for spikes in your revenue?
What’s Wrong With Discounts?
Offering discounts is still one of the most common ways to attract new customers and retain existing ones – short term. But do you want your business to achieve short term or long term success?
Discounts can influence customer lifetime value (LTV) and their behavioral patters, and not always in a good way.
According to Andrew, attracting your customers with discounted prices can result in the lowest lifetime value, simply because if you’re lowering your price, your message is: “Don’t buy from me when I say my products cost $100 – they’re really only worth $60, just what they cost 2 days ago!”
That is, you’re training your customers to think that your products aren’t worth their full price – they should wait until you reduce them again.
And if you don’t, your full prices will feel like a rip-off, even though they aren’t.
So you give more and more discounts, just to keep your customers purchasing from you, eventually falling into a discount rabbit-hole with no way out.
Even if you might sell more items this way short term, your long-term revenue starts dropping and you lose long-term fans: many of them are buying from you only because of your low prices!
How to Avoid the ”Discount Brand” Label?
How do you build long-term trust and loyalty among your customers and show the true value of your products without making less money?
By changing your offer, of course!
More than ever before, your shoppers are demanding some sort of purpose-driven activity and mission tied to the brand they purchase from.
Not only millennials and Gen-Z, but now the older generations too!
Simply put, your customers want to know that you stand for something.
A Good Cause Is More Important Than Saving Pennies
Take Amazon or TOMS for example.
Even when we can’t get a discount on their products, most of us will happily purchase from them, knowing that they support a good cause.
On TOMS website, we can read: “For every pair of TOMS shoes purchased, a pair of new shoes is given to a child in need in partnership with humanitarian organizations.“
But what if your audience is so diverse that you can’t pick just one good cause that the majority of them would be happy with?
Look at what Amazon does. If you shop through Amazon Smile (which is an option, not an obligation), you can actually pick from over a million different charities that you’d like to donate 0.5% of the price of your purchase.
As a customer, you don’t pay more, but you still feel good about paying the full price of the product: the more you spend, the more money that 0.5% actually is that goes to your favorite charity!
Giving to a charity might not work for your brand, with your audience or the way you operate. So what other alternatives do you have if you want to avoid cheapening yourself with discounts?
1. Offer small gifts!
On every purchase above a certain amount, offer a free gift as a token of appreciation. You can even send your customers a sample of a new product and ask them to be the first one to review it, because you trust their opinion! Doing this, you can immediately learn a lot about how your ideal customers would enjoy the new product in the future
2. Create thoughtful bundles
In case you can’t afford giving products away for free, make your customers feel appreciated with your thoughtfulness.
While most discount brands just list a number of random items, you can have your customers’ needs in mind, and put together bundles for different holidays, occasions and needs. E.g. a self-care bundle for working mums, or a kit for to keep outdoorsy kids excited on rainy days!
Forget Discounts – Give Back With Givz
Givz is an ecommerce marketing platform that boosts sales while having a positive social impact, and reducing the need for discounts. With Givz, you can automate spend threshold, percentage-back, product-specific, and coupon code campaigns by using donations instead of discounts.