How Often Should #DTC Brands Offer Discounts?
Lots of people have opinions.
There’s more than 1 right answer.
Here are my thoughts.
First, I often hear brands say, “I don’t want to discount and devalue my brand.”
I think that’s a great place to start, but it’s a bit of an extreme approach.
Yes, Nordstrom only does a sale twice per year, but is that the best strategy for your brand?
The first thing to consider is that, yes, discounting too often can devalue your brand.
If you’re constantly running sales, then you’ll condition customers to only buy when your product is on sale.
The goal is not to be that brand.
But you may be surprised to know that some customers are not price-sensitive and will nearly always buy at full price.
Others are more price-sensitive and will typically only buy when you run a sale.
You can also leverage sales to get big sales bumps.
It’s possible to do a week’s worth of sales for Black Friday, and to do the same in June with a “Black Friday in Summer” type of an event.
So what should you do? My recommendation is...
#1: Don’t offer more than 10% for your email signup UNLESS you have a really high re-order rate.
You could do 15% if margins are high, but 20% is too much IMO.
And if your re-order rate is super low, you may not want to offer a discount at all.
#2: Run a sale every one to two months to get a bump in sales and to catch people who are waiting for a deal and/or are price sensitive.
Plan these around typical sales events like Memorial Day Weekend, etc.
#3: Don’t discount if you don’t have to.
If you are launching a new product, that’s special enough.
There’s no need to discount a new product launch.
Etc.
#4: Discount less now that supply chain is slow, inventory is harder to get, inflation is making prices go up, etc.
You’re going to see brands discount smaller percentages and less often now that supply and inflation are an issue.
This should be planned accordingly.
#5: Discount as infrequently as you need to in order to hit your sales goals.
Just because other brands are doing sales doesn’t mean you need to follow.
If you’re consistently selling out of inventory, don’t run a sale just to run a sale.
The main takeaway is this...
Discounting is part of a strong #DTC marketing strategy, and you won’t devalue your brand by running a sale every 1-2 months.
Instead, you’ll reach customers who are waiting for a deal, create a feeding frenzy, and get more people to buy.
If your goal is a premium brand that doesn’t discount often, then you can discount less often without devaluing your brand.
You should also discount less often if inventory is an issue.
Just don’t make the mistake of thinking that running any sales or discounts will devalue your brand.
What are your thoughts?
Leave a comment so we can discuss!
