What Your Discounts Say to Customers


Discounts work. If you are a regular reader of this blog you will know that I often write about the value of special pricing, promotions, offers, and sales to drive interest and boost purchases.

However, there is an opposing view. And it would be unfair of us to ignore it entirely. Because as much as it’s true that discounts can work to increase revenue over certain time periods, over the long term they can (not always but in some cases) also have a negative impact on your business.

The following is an attempt to explain why – not to advise against the practice, but to spread awareness about the potential dangers of discounting strategies so that you know what to look for and when to change course.

Discounts and Your Brand

Use of discounts can affect your brand – that is, the impression that consumers have of your company. Some companies use discounts quite frequently. Others can afford never to offer discounted pricing.

Whether or not you use discounts does not determine what people think of your brand. However, when you use discounts often, you are signaling two things:

  1. The value your products or services provide may be less than one would assume at full price
  2. Consumers should never buy at full price because they can always wait for a bigger discount

Apple Never Discounts

When we think of consumer brands that do not discount, Apple is the first one that comes to mind. Apple has been able to build their success as more of a luxury brand. They have sustained a higher price point in the marketplace than most of their competitors.

One might argues that Apple would grow their dominance if they started offering lower prices. They might bring in more customers, and generate more revenue, with discounts and other promotions.

But Apple has made the active decision not to do this. Most likely, that is because they are afraid what that strategy might do to the brand that they have spent so long crafting. Price is not a part of the Apple value proposition. Instead, they are focused on creating quality products that are easy to use.

Walmart vs. JC Penney

Walmart and JC Penney are two brands that consumers will generally associate with low prices. Unlike Apple, these two retailers have actively chosen to compete on price. Price is a key part of each of their value proposition.

But, they each have a different strategy for offering lower prices. JC Penney uses a discount strategy, offering frequent sales to drive people into stores. Whereas Walmart offers what they call “Everyday Low Prices” – a way to distinguish themselves as offering the lowest prices, all the time.

In fact, in 2017 JC Penney’s new CEO chose to deploy a new pricing model which more resembled Walmart’s. Rather than offering frequent sales, they told their customers that they would now be offering the lowest prices available, all the time.

What happened? Consumers revolted, sales slumped, and the CEO was fired. And they have since gone back to the original, sales-driven model.

This demonstrates points #1 and 2 up top – when you use discounts to meet your sales goals, consumers will associate your brand with discounted pricing. This creates an expectation that will be difficult to break from.

Should You Offer Discounts?

To repeat, all of the above is not a reason not to offer discounts. But it is something that you have to consider when you start making discounting a part of your pricing strategy.

Discounts and other promotions can drive increased interest, traffic, and sales. But just like anything else, if you become too reliant on discounted pricing to grow your business, you run the risk of negative brand impact in the long term.

Will You Honor an Expired Coupon?

If you are a B2C company that runs any type of special offers, this is a common question that many businesses will hear from prospective customers-

“Will you honor an expired coupon?”

Or some version thereof. “The deadline was yesterday, can I still take advantage?” Or “I found this old offer code and it’s not working, is there a new one I can use?”

As a marketer or small business owner, you are likely to have a quick gut reaction to these kinds of questions. And based on a number of conversations I have had, it will be either one of two responses.

#1 - No way. You missed the deadline. You pay full price. What’s the point of having deadlines if we don’t stick to them? If I make an exception for you, I’d have to make an exception for everyone. Otherwise it’s not fair. Sorry.


#2 - Absolutely. That coupon will still work, or we’ll give you a current one. Because that means a surefire sale for us. Whereas saying no might lose us a customer. So why wouldn’t we honor it?

For the longest time, I was firmly in the first group. For whatever reason, I felt strongly that giving away discounts that were not “earned” was not fair. But I see now that I was wrong.

So what if customers take advantage of you and get discounts that they would not normally be awarded? If they ask, give it to them. Because that gets you a sale you might otherwise lose.

Customers that ask for a discount are price-conscious. They will represent a small percentage of your overall customer base, who will continue to shop you as usual and “follow the rules” when it comes to offers and discounts.

If your response was closer to #2 above, good for you. If it was #1, you need to train your mind to think through this question differently.

Free Marketing Ideas Part 20 – Promotions

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Welcome to the latest edition of my new weekly blog series, “Free Marketing Ideas”. Each week I will identify and explain a simple marketing idea that you can employ at low or no cost. Last week’s topic was Make Deals.

This Week’s Topic = Promotions

Pricing and Promotion are two of the 4 P’s of Marketing that are taught in most intro-level marketing classes. The others are Product and Placement.

The price that you set for your products or services is a tool that marketers can use to distinguish themselves from the competition, set customer expectations, affect demand, and control profits. And promotions are special offers that you make in order to drum up more business.

Most promotions don’t have to cost you anything in terms of real dollars. It takes time to dream up and implement them. If you’re offering discounts than there is a cost to you related to lower margins. But offering a promotion is a way to increase sales without spending a lot of money on advertising.

I could spend days listing all of the different kinds of promotions you can try, but let’s stick to a couple simple ones. The first are basic discounts, offering lower prices on one or more products for a limited time. The second is a free shipping offer, which is a very effective way to increase your conversion rates in an online sales environment.

The third is BOGO (buy one, get one free) which will have a similar impact on sales to a 50% off special. The fourth is a bulk sale discount, a discount on orders of a certain size aimed at increasing the value of each order.

A fifth is a free trial or free sample, that allows people to try your product or service before they buy it. You can also drive more sales with financing plans that require a lower up front cost, product add ons, the promise of discounts on future items, etc.

The marketing team should always be planning promotions that will boost sales and revenue at key points throughout the year. Creativity is a part of promotion planning. Some will work, others will fail. The key is to always be thinking, planning, and executing.

Share your thoughts on this idea, and other free marketing ideas in the comments section below and keep the conversation going!

Free Marketing Ideas Part 16 – Groupon and Living Social

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Welcome to the latest edition of my new weekly blog series, “Free Marketing Ideas”. Each week I will identify and explain a simple marketing idea that you can employ at low or no cost. Last week’s topic was Create a Loyalty Plan.

This Week’s Topic = Groupon and Living Social

If you have not heard of Groupon or Living Social by now I would be very surprised. But nevertheless, they are competing coupon services that partner with companies to create and publicize deep discounts. They have built up enormous email distribution lists of people who are looking for discounts from companies all over the world.

While the height of their popularity is likely already passed, many companies continue to use Groupon and Living Social successfully.

Getting started is simple, as long as you are willing and able to offer significant discounts. You can contact a sales person responsible for your area, they are usually geographical, and find out if there is interest on their end. As long as you are offering something that people want, and it’s not too expensive, there will be interest.

Then, you will work with them to customize the deal that your company will offer. It is common to discount your product or service by 50% or more.

The rest is up to them. They will write the copy, which you will approve. They will announce the offer to their lists. And they will manage the sales process.

Customers pay through Groupon or Living Social, and then they will pay you in increments. They will also take a percent of the sale for doing all the work and exposing your company to their customers. This is usually about 50%, but can be negotiated lower depending on the popularity of the offer.

And that’s all there is to it. It can be a great way to gain exposure for a product or service, and reach new customers that you cannot afford to reach with your own marketing. And the only cost is the share that Groupon or Living Social will keep as commission. But since it is just a percentage of the money that you are already making, there is no commitment on your part.

Share your thoughts on this idea, and other free marketing ideas in the comments section below and keep the conversation going!

Free Shipping vs. Discounts

“For whatever reason, a free shipping offer that saves a customer $6.99 is more appealing to many than a discount that cuts the purchase price by $10.” – David Bell, Wharton School of Business

It’s true. Customers value free shipping. It’s a simple fact that every marketer must understand when we think about pricing and promotions.

What does it cost to ship your product?

Maybe your shipping cost is standard, maybe it varies based on the quantity of the order or the destination of the shipment. Regardless, there are several strategies that companies employ with regards to shipping costs.

You can charge the consumer what you are paying, the break even philosophy. You can charge the consumer more than it costs you, the profit philosophy. Or you can offer free shipping, no matter what.

Why offer free shipping?

Free shipping sells. It’s a tried and true selling point for products of all kinds. Many companies make a living out of promoting the ‘free shipping all day, every day’ line. But if that’s not for you, using free shipping as an incentive can be a very worthwhile effort.

Use your email marketing to generate a special promotion, free shipping today only, to drive a high volume of sales needed to meet forecasts.

Or use free shipping as a way to increase the value of each sale. Many ecommerce sites will promote “free shipping on orders over $xxx”. If the cut off is $100, someone who is making a $20 purchase may not be intrigued enough to spend another $80. But someone who has $70 or $80 of stuff in their carts are sure going to take notice.

Why not discounts?

Discounts can still work, but depending on what your shipping costs are, free shipping has been proven to work better. There is no real reason that marketers and business analysts point to when they try to explain why this is the case. It just is.

What if you don’t charge for shipping?

If you don’t charge for shipping, you’re ahead of the game. But why not promote it? Consumers who have never purchased from you before will take notice if they see “Free Shipping on all Orders, No Exceptions”. If you don’t charge for shipping and you’re not promoting it in as many places as possible, you are missing a huge opportunity.

I want to hear from you…why do you think ‘Free Shipping’ works so well as an offer?