How to escape discount fatigue.  From Mention Me

Escape from the seasonal discounting trap

   

Deep discounting has been a rising cultural phenomenon.  It’s linked to the state of the economy of course; it has escalated in leaps and bounds since 2008.  Retailers have extended and multiplied sale periods, while also adding new seasonal shopping stimulus days.

Last week I posted about how we’ve seen retailers build momentum with referral marketing during their seasonal peaks, but it is much more common for businesses to fall back on heavy discounting to get cut-through on these seasonal shopping days.

I believe there is even more driving our discount culture here in the UK than the economy.  It’s symptomatic of a breakdown of consumer trust in traditional above-the-line marketing.  Nielsen published a study on this back in 2015 and our CEO, Andy Cockburn, has blogged about it recently at Mention-Me.com.  That breakdown of trust means consumers block out one-way ‘megaphone’ advertising, and brands turn to discounts as an obvious way of increasing engagement and stimulating a conversation with customers.  

But shoppers are savvy and either discount fatigue has sets in or brands get addicted to ever escalating discounts.  

Customers are increasingly numb to sales as a springboard for building longer-term relationships between themselves and the brands they buy on seasonal sale days.  First-time buyers who come as a result of a seasonal discount generally have lower average order value, less chance of repeat purchase and ultimately a lower life-time value.  

Can British retailers reverse this trend? One thing which won't help is more discounting.  It's not easy but I believe the answer lies in starting on the journey of building a new-style of marketing playbook. Here's how:

  • You might have heard of Inbound Marketing in the B2B space.   Borrow some techniques into B2C if you haven't already.  Build a two-way relationship with your customers rather than fall back on one-way megaphone marketing. The women’s fashion brand, Hush, are a great example of a brand doing this very successfully.
  • Can you identify your brand advocates?  Brands often think that their biggest spenders are their best customers but you should also consider those who help spread the word. Think about ways you might be able to identify them and then harness their advocacy.   Consumers trust recommendations from friends more than any other form of advertising.
  • Reserve discounting as a reward for a positive action. Offer it as a thank you for referring a friend like we do here at Mention Me.  
  • If you have the capability on your website use AB testing to measure the effectiveness of one discount level against another, or of a discount compared to a different reward. Test different discount increments until you hit the sweet spot between incentivisation and margin erosion.
  • Plan ahead when dialing down discounting so that you start to build up other product and brand attributes.  Excellent customer service, value-for-money every day, or interesting product origins can resonate with customers. Being clear what these are in the mind (and language) of your customers is critical. Discover what your customers say as they talk to their friends about you and build on the positive attributes of your brand that are most important to them.

Is anyone else planning (or wishing) they could pull themselves out of the discounting hole?  

I predict this is the year to do it - both consumers and retailers are worn out by unhealthy discounting.  It’s time to try something new.

Read our related posts:

Mothers Day and referral amplification

How to turn Black Friday discount shoppers into advocates

How to build a brand without spending a fortune

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