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- 8 alternatives to discounting that will increase sales without slicing margins!
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Should you build an app or website? Pitcherific helps you create, train, and improve your pitch. Oh, and don't forget the retailer needs to take its cut, further inflating the price of your Gillette razor. Dollar Shave Club understood its audience. The simpler the transaction the better. Ecommerce allowed the brand to cut out the supermarket middle-man and sell directly to the customer. The so-called 'dude market' are digital natives. They don't watch much TV, read many papers, or listen to any radio. Instead of shelling out millions on regular advertising campaigns, DSC created their own content.
The Internet and e-commerce has so profoundly changed the economics of business that it is only a matter of time before other product categories are impacted. The tried and formerly true method of dominating distribution and barricading new entrants with monstrous economies of scale is ageing fast. Let's paraphrase for those of you not in the business of disrupting the 'fancy brand name shave tech' industry. Here's the generic ecommerce subscription pricing message: Just give us your credit card details, and we'll have it delivered to your door at the frequency you need. Because we send it direct to you, and we know exactly how many orders we have to fill - we're able to keep our prices low and pass on the savings to you.
That was discount enough. If you can convince someone to subscribe for a regularly delivered product - there's no need to offer a discount. You've already earned the repeat sale at full price. To offer anything less would be to cheapen the value of your product in perpetuity. Spend a whole bunch of cash on full price items and we'll reward you for your custom with a nice little freebie.
Discounting cheapens your brand and your product. You're telling your customer that you can afford to sell the item at a lower price. The value of the product decreases in your customers eyes. Patrick Campbell from Pricing Intelligently has a message for compulsive discounters, and it's about as subtle as an armoured tank:. To those dirty discounters reading this article - I'm sure you're screaming at me about KPI's and sales pressures. Of course, sometimes you do need to use incentives, urgency and scarcity to drive conversions.
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The underlying strategy is a tried and tested retail truth. Derek Halpern of Social Triggers , explains that discounts erode brand value. Instead, retailers can add value with freebies and extras to entice purchase. We can acheive both of these goals by offering a freebie as an incentive to purchase more full-priced items. This allows you to earn normal margins on your sale, while still incentivising an urgent purchase. Better yet - freebies don't de-value your brand, nor do they reward the habit of waiting for a discount on future purchases. Instead, add more units, more user seats, premium service, etc.
Surfstitch also incorporates the freebies offer into their product pages to incentivise upsells and increase the average cart size of their customers. You can see how Surfstitch promote their 'free gift' offer in each of the red boxes below:. The more you buy, the better your reward. Discounting may be the easy way out.
Regular discounting rewards a dangerous habit developed within the mentality of the modern online shopper - ' if we wait long enough, we'll get a better deal. Research demonstrates that your customers percieve more value in a freebie than a discount. Use 2 for 1 offers, or free gifts unlocked by a certain level of purchase. You can still increase conversions, drive more impulse sales, and get rid of excess stock - all without devaluing your product or brand. Field Notes are another Gorilla content marketing favourite. You'd be amazed how much someone could care about a simple notebook brand.
I write stuff everyday, and like many creators, I find the creative juices flow more freely on to the page than the screen. Sure the paper quality is great, and the materials used make these bad boys exceptionally durable. They believe in the same things I do. They care about crafting creative ideas. They care a quality handmade goods. They care about great design. It doesn't take Harry Houdinin to tell you that Field Notes aren't using discounting to build a passionate tribe of loyal repeat customers.
Field Notes use a membership concept to create a community of exlusive brand fans. No need to discount when you have an exclusive group of members paying full price for your product 12 months in advance. Can you create an ongoing subscription-based series that keeps getting better and better and better? Can you find a way to make your customers so excited for a new product that they pay in full before it has been released? Can you make your exclusive tribe of members so excited about your brand they are prepared to give you their credit card details in exchange for a regular surprise package delivery?
The Fifth is a new kid on the ecommerce block. The Fifth are selling you the chance to be a part of something special. Writing for We Are The Clique , Dani Watson explains how The Fifth uses the psychological principle of scarcity to xompel users to buy without the need for discounting:. On the fifth of each month, the e-commerce site is opened to customers and at midnight on the tenth, the shop is closed, until the following month.
Whatever your business, whether it be service based or you sell products, creating urgency is an amazing way of getting people to buy fast before they miss out and using Instagram to encourage this is really powerful. Apart from encouraging subscribers to buy without the need for a discount, The Fifth has walked into another significant strategic marketing advantage. Because they only sell for five days of the month, the remaining 25 days are totally devoted to delighting sunscribers and customers. There's no need for interruptive promotion or hard-selling.
Instead, The Fifth concentrate their marketing efforts on delivering helpful and valuable content. Dena Silver, writing for The Observer , explains the unexpected benefit The Fifth have derived from this innovative business model:. Fans of the brand are excited to be a part of this new and innovative brand story. They can't wait to tell their friends about the cool new watch they've bought - and the fact their friends can only get their hands on one for five days each month makes the story so much more exclusive and alluring.
Instagram and Facebook has allowed this ecommerce startup to attract and nurture a huge bunch of potential customers at a cost that barely registers in comparison to the ad budgets thrown around by traditional watch retailers and manufacturers. The Fifth is able to convert a sizable chunk of these followers into paid-up brand evangelists who act as unpaid marketing ambassadors. If you follow us on social media, or subscribe to our email newsletter, you'll have the chance to take up the offer.
Just make sure you buy before time runs out! If you can find a way to continually develop genuine excitement amongst your following, you don't need to discount to spike demand. Prepare regular customer surprises that are only offered for a limited time period. You'll keep your subscribers and followers interested in your brand, and the urgency you create will be enough to convert that excitement into sales. That's just the beginning for a sustainable ecommerce business. The 'frequent flyer' loyalty program was first invented in its current form by American Airlines in Former CEO Robert Crandall came up with the idea of awarding existing customers for their level of loyalty with an accumulating prize.
The more products flights you buy - the more rewards you will get. At the time, grocery chains were offering 'green stamp' coupons to similarly reward regular shoppers. The rest is history - but an interesting history at that. For the astounding story behind the frequent flyer program including the tale of a man who purchased 12, tubs of pudding in the quest for a lifetime of free flights , Gimlet Media podcast, Surprisingly Awesome has dedicated an entire 25 minute program.
It's a rollicking way to learn why loyalty programs work, so add this one to your to-listen list. But it's not just airlines that manage to increase average cart size and lifetime customer value with a simple loyalty rewards program. Any ecommerce brand can appropriate the frequent flyer idea to their brand to help drive demand, encourage full price purchases, and reduce the need to discount.
Mark Hayes, writing for the Shopify blog , urges online retailers to take the loyalty program learnings from the tourism industry and apply it to their own niche:. Offering points to your customers will help you stand out in the ever-increasing ecommerce crowd. The results of effective loyalty programs speak for themselves. If you focus on nuturing existing customers into lifelong brand loyalists, you can nudge up the two of the most important metrics that determine sustainable ecommerce success.
Conversion specialist Jeremy Smith penned a valuable article explaining how ecommerce brands develop successful loyalty programs. He cites some statistics from loyalty software provider, Sweet Tooth, that demonstrates the power of the concept: Lindsay Kolowich explores the how behind ecommerce loyalty programs in this helpful Hubspot article titled " 7 Customer Loyalty programs That Actually Add Value ".
Any ecommerce marketing pro should take heed of Lindsay's advice in this critical paragraph:. This helps solve the problem of members forgetting about their points and never redeeming them because the time between purchase and gratification is too long. This nugget of advice pinpoints the fundamental requirement for a successful ecommerce program that rewards loyalty and discourages discount shoppers. If you buy more, you'll get more perks.
If you buy more regularly, you'll get more regular perks.
8 pricing strategy alternatives to the dangerous discount sale
If you spend more money with us each year, you'll receive exponentially more reward. Just don't expect a discount. You'll have to join the club to get the perks. You need to find a way to encourage customers to continue to buy more full-priced items, instead of incentivising the discount-hungry bargain hunters. Try to incorporate a compounding structure. A tiered system will help you reward initial loyalty, and continue to encourages more and more full-price purchases throughout the lifetime of the customer.