Discounting is not a Marketing Strategy: How to Create Value for Your Brand For many retailers, both new and existing customers alike have now been conditioned to wait until an item becomes discounted before purchasing. A focus on creating value for your brand can help break the discounting cycle.

Understanding how to break the relentless discounting cycle starts with understanding your customers & how you can make your brand valuable to them. For many retailers, both new and existing customers alike have now been conditioned to wait until an item becomes discounted before purchasing. New customers shop bottom-line pricing, while loyal customers may start shopping elsewhere due to enticing brand competition. However, instead of using sale messaging as a marketing technique, focus on creating value for your brand and/or product at full price to capture and retain the customers you want. 

Here are 5 steps to increase brand value and get customers to buy at full price.

Determine what your different customer types currently look like. Create parameters around who you consider an ideal customer, vs a low-value customer, vs an at-risk customer by analyzing metrics such as when their last purchase was, how high their Average Order Value is, whether they are engaged with your CRM marketing, and whether they are high-value or sale shoppers.

Getting a deeper understanding of your customer's journey & predictive spending behaviour between categories and channels will enable you to customise messaging to determine your relationship with them and how you can invest in nurturing their journey. Provide them with personalised interactions with your brand to deepen the connection and demonstrate your brand’s value.  

Read more: Getting Personal: How to Leverage Data to Connect with your Customer. 

It costs five times as much to attract a new customer than to keep an existing one. The probability of selling to a new customer is 5-20%, while an existing customer is 60-70%. Returning customers are more likely to check out with more items in their cart and spend 67% more over time than one-time customers.

Marketers are well-versed when it comes to offering incentives such as loyalty & referral programmes. However, not every customer is equal, and customer data must be leveraged to determine how a brand rewards its customers and when to offer them added convenience or customer service.

Shopify reports that nearly half of shoppers abandon their carts due to long shipping times, and 45% of shoppers are actively looking to shop from businesses that have their delivery times clearly shown. They also share that 33% of repeat customers would abandon a retailer if they have a difficult return experience.

Consider same-day or free shipping, easy returns, repeat order subscriptions, and so forth, as offering convenience may be what gives you the upper hand against competitors who are lower priced but do not provide as pleasant of a shopping experience.

Put focus on the quality of your products rather than the price tag, this way, you’re conditioning your customers to pay for the product, not for the ‘deal’. Reducing markdowns by getting the product and price right starts with involving customer data in merchandising decisions. Treat your pricing with respect to your brand, so when you run a promotion the impact is greater, and your customers respond accordingly.

Use the right branded messaging around the discount percentage to entice customers without damaging their perspective on your brand or product. Done intently, you can make a sale feel exclusive and exciting, rather than desperate. When deciding what you are discounting and to what extent, make decisions based on customer data.

Your customers may respond better to a $ off offer, rather than a % off or vice versa. There may be times you run a sale with the webpage fully marked down, or decide to offer a private discount code.

Try A/B testing different discount offerings to find the right discounting strategy for your customer. When you do go on sale, consider leveraging it as an acquisition initiative and provide private access to those who opt in, allowing customers to sign up beforehand to gain access to the sale.

While discounting & sales are inevitable for most E-Commerce brands,  a focus on creating value for your brand and product can help capture and retain the customers you want, ensuring less reliance on the discount cycle. 

This guide is part of our series – Discounting is not a Marketing Strategy. Read Parts 1 & 2 below: 

PART 1: The State of Retail Markdowns

PART 2: Effective Inventory Management: The key to maximising full price sales