Discounts and sales (How do the best stores do it?)

We get asked a lot by new store owners about doing discounts and sales. In this blog we look at how you can launch a promo and drive sales for your customers. We also cover some of the other options you have and look at the surprising flip side of promotional campaigns and learn how the most successful store owners approach this kind of marketing with their brands.

Pic Warren Wong c/o Unsplash

Seeking to run a discount code normally happens after launch, when the founder has got maybe one or two purchases and a few likes on their first posts, but perhaps not as many sales as they would like.

It almost feels like a discount would get people buying. If only it was a bit cheaper, right?

This is a really common feeling – and it’s a good sign. You’re seeking to find ways to increase your sales. And when your brand makes it to the big leagues, the answer to this problem is obvious in retrospect but like all this stuff, seems counterintuitive at the time: Discounting is the first idea and it’s also the worst idea. Here’s why.

The race to the bottom is the wrong race.

The idea that people buy the cheapest product among competitors is a pretty negative model to apply to your brand. It would be more accurate to say that people buy the best value product they can easily access. So to buy stuff, people need to be aware it exists.

And easy to access is more complex than just being aware of it, or seeing it. Mobile loading speed can be as important as a front page feature, and celebrity endorsement are arguably as important as word of mouth. Simplifying the way that brands are built into just product and price leads people to think that everything needs to be cheaper. There’s a limit to where that can go. What’s almost unlimited is the value add your products can create. In fashion, that latter part, value, includes really hard to define value like “coolness”  – That’s why people spend £1000+ on trousers.

If you want to increase sales, you can increase awareness of your brand and increase the perceived value of your product and story.

The Test

To test this theory, we looked back to see how different prices affect different conversion rates. Starting at £20 per t-shirt, we increased prices and the profit-per item, but conversion rate dropped off as expected. And when we decreased prices conversion rate increased – we sold more – at the start. But then a funny thing happened, and actually below that first drop to £19, conversion rate didn’t change at all. Below a certain point, price isn’t a factor. And some consumer’s questioned the quality of the product at extreme (near cost) prices. Below a certain point, prices make no difference to sales.

Discounting probably wont double your sales instantly, but it definitely will half your profit instantly.

The first step forward from here is to accept that no brand will make a sale 100% of their audience because of a discount. And on stores we control, we don’t actually do discounts – we haven’t for years – as they’ve grown up to 300% year on year. We did it by focusing on awareness, traffic, great designs, great photography and reaching new people with ads – as well as making sure our brand and content flowed together to create a real high quality feel that people could buy into.


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