Offering discounts can be a quick way to incentivise sales.
But although it temporarily increases the number of orders you receive, it eats away at your profit margin and, longer term, devalues your brand – especially with your most loyal subscribers.
If you’re sending out discounts regularly, you might find that first time orders are high but repurchase rate is low.
If this is the case, you’re attracting customers who won’t pay full price for your products.
If your regular customers only purchase when your product is discounted, you have probably trained them to wait for the next “money off” email.
This can be even more problematic for sustainability-focused brands.
Offering discounts so frequently can play into the unconscious bias people have about sustainable products; that they are more expensive and lower quality.
People watching your brand and seeing so many offers will assume that you can afford to be discounted regularly, and therefore are overpriced the rest of the time.
Many premium brands operate a no discount strategy at all times to preserve brand integrity and perception.
The good news is that there are lots of ways to incentivise sales, attract email subscribers and drive engagement without constantly offering discounts:
1. Random refunds day
Instead of running collaborative giveaways with other brands to grow your list (which often end with only a small percentage of engaged subscribers), or giving a discount to encourage orders, you can run a semi-regular (we recommend twice a year) ‘Random Refunds Day’ where x amount of orders placed that day will get a full refund.
Chamberlain Coffee has had success with this strategy, often aligning the random refund days to holidays and retail milestones like Black Friday to incentivise orders even further.
2. ‘Golden Ticket’ drops
Channel your inner Willy Wonka to incentivise sales in-store and keep your buyers happy, or slip golden tickets into online orders as you pack them.
This year Tony’s Chocolonely teamed up with Oxfam to hide five pairs of Glastonbury tickets inside special edition chocolate bars, for bars sold in Oxfam shops or Oxfam’s online store, with proceeds going to charity – effectively tying the campaign into their impact messaging without triggering the attitude/behaviour gap.
This can be an effective activation for a new retailer, or a way to temporarily increase sales in certain locations or stores.
3. Birthday rewards
If your product is gifting appropriate and you can build customers’ date of birth into your data capture, you can set up an automated flow to email people a gift for their birthday and reward their loyalty.
Offering them a gift card, rather than a discount code, will feel more premium and significant and will build brand loyalty.
You could even determine the value of the gift card based on lifetime customer value – i.e. you could send different amounts to different customers based on how many times they have purchased from you in the past.
You should consider offering free next day delivery on these orders if you don’t already, to incentivise them to use the gift card right away and play into the desire for instant gratification.
It’s highly likely that if you offer a significant amount on the gift card and free next day delivery, they will spend more of their own money with you too.
4. Treasure hunts
Hide your products in secret locations to be revealed through clues on your social media channels.
If you want to encourage subscribers to your mailing list, you could promote the hunt on socials but only send clues to subscribers (but make sure you use segmentation so you don’t annoy subscribers who don’t want to take part, or are in other countries).
This strategy has been popular for Jubel Beer, who’s recent “secret palette drop” rewarded 50 fans, and was over in 30 minutes!
5. Limited edition drops
Limited drops create a genuine sense of urgency and scarcity, which behaviourally encourages customers to take action (i.e. purchase) now.
“Drops” are special release products that are either scarce in quantity (due to intentional limited production) or scarce in availability (due to a limited-time purchase window). Often they won’t be restocked, either.
You can promote drops on social media with a teaser campaign, and release them early (or even exclusively) to email subscribers to grow your list with hot purchase leads.
Depending on your manufacturing and delivery timescales, you could potentially even pre-sell via a drop to avoid over ordering, fund production minimise the financial risk.
Fashion brand Sporty & Rich releases curated drops throughout the year to reduce excess inventory and help towards its goal of being a zero-waste brand.
A word of warning…
Discounts are a common incentive in “refer a friend” programmes, which can be a good way to leverage social proof and attract new customers.
But you should choose the size of your referral incentive carefully…
Studies have shown that high financial rewards greatly increase the number of referrals, but strongly reduce the average lifetime value of newly referred customers.
Which means you could actually acquire new customers at a loss.
