Getting off the Discounting Drug 💊

Hi again, 

Hectic week, how are you??

Before we jump in, It’s week 2/4 in TLV, and I owe you a weekly coffee update:

Dama: 9.1. The coffee has a unique sweetness and a depth of flavor. Pastries are my fav in the area (photo below), and the vibe has a hippie feel to it, even though the price does not match…

And the weekly photos that matter:

Last thing before we get into this week's topic:

I am opening up newsletter sponsorship slots for July next week and want to give readers of the newsletter first access.

If you would like to learn more about sponsoring the newsie, just shoot me a quick note.

This week, I want to discuss a topic that comes up in almost every consulting conversation I have had over the last two years: easing off the discounting drug.

Between the website popup discount, abandoned cart promo, win back coupon, etc., we essentially train customers to pay below-cost prices.

Then we are shocked when our emails and texts don’t hit without a discount.

Almost everyone plans to discount less in the coming quarter or year, but few successfully get there.

Let me try to help the best I can.

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Understanding Your Discount Dependency:

Before making any changes, it’s crucial to understand how deeply ingrained discounting is in your current strategy. Start by analyzing your sales data to determine what percentage of your revenue comes from discounted sales. 

This gives you a clear picture of the challenge ahead and will help measure the impact of reducing discounts.

For example, if 40% of your revenue is driven by discounts, you can’t simply stop offering them overnight without a significant impact. Instead, use this data to plan a gradual reduction, allowing your customers time to adjust.

Enhance Your Value Proposition:

One of the best ways to move away from discounting is to enhance what makes your brand unique and valuable beyond price. 

While at OLIPOP, it meant explaining why a “soda” should cost 4x a can of Coke, which starts with functional benefits and the fact that it’s not bad for you.

If you sell skincare products, this could include superior product quality, exceptional CX, the founder story, or exclusive features that put you ahead of the rest.

Think about the brands you love that don’t rely on discounts. What draws you to them? 

Often, it’s the unique value they offer that goes beyond price. Aim to create a similar perception for your brand.

Utilize Bundling and GWP:

Bundling products or offering gifts with purchases (GWP) can provide value without reducing prices. By bundling complementary products, you can increase the perceived value of a purchase.

Similarly, offering a free gift with a purchase can encourage sales without a direct discount.

For instance, consider bundling a popular cleanser with a new moisturizer if you sell skincare products. Alternatively, offer a free travel-sized product with a minimum purchase amount. These strategies shift the focus from discounts to added value.

Communicate Value Through Content:

Educate your customers on the value of your products through quality content marketing. Share your brand stories, behind-the-scenes looks at production, and customer testimonials highlighting your offerings' benefits and quality. 

When customers understand the value, they are less likely to demand discounts.

Create blog posts, videos, and social media content that showcase the craftsmanship, innovation, and passion behind your products. 

You can shift the conversation from price to quality by consistently communicating your value proposition.

Jones Road Beauty does this very well. They never discount, yet content does a great job at highlighting value and winning over customers.

Leverage Social Proof with UGC:

A powerful way to enhance your brand perception without resorting to discounts is through user-generated content (UGC). 

Social proof can dramatically boost your brand’s credibility and appeal. By featuring real customers and their authentic experiences, you build trust and foster a deeper connection with your audience. (Consider using folks like minisocial, this week's sponsor, to collaborate with micro-influencers and obtain high-quality UGC.)

Implement a Loyalty Program:

Loyalty programs can be a powerful tool to retain customers without slinging discounts. You can gain repeat purchases by offering double/triple points earning periods, exclusive access, or other special perks. 

This can keep your customers engaged and incentivized to buy without waiting for a 20% discount.

It is important to note, though, that loyalty programs should not be vanilla or generic. Put some real thought into it to make it an extension of your brand look and feel. 

Good examples of great ones are Skims and Princess Polly.

Implement a Strategic Testing Approach:

Transitioning away from discounts requires careful planning and testing. Don’t just cut cold turkey; test your way into it. 

A/B testing can help you understand what resonates with your audience and what doesn’t. 

Start with small changes and measure their impact before rolling out larger adjustments.

A/B Test Your Strategies:

Test different approaches to see what works best. For example, compare the performance of a loyalty program against a discount campaign. Test various messaging techniques, such as emphasizing quality and exclusivity over price. This will help you understand what drives engagement and sales without relying on discounts.

Change One Variable at a Time:

To accurately measure the impact of your changes, alter one variable at a time. If you change multiple aspects simultaneously, it will be challenging to determine which of these changes actually caused the results.

Whether it's adjusting email content, timing, or the type of offer, isolating variables is key to understanding their effectiveness.

Document Everything:

Keep detailed records of your tests, including hypotheses, changes made, and results. This documentation will help you learn from each test and apply those insights to future strategies.

Regularly Review Your Data:

Continuously analyze your sales performance and customer behavior. Look for trends and patterns that can inform your strategy.

Investigate and adjust your approach if you notice a drop in engagement or sales.

Focus on Customer Experience:

Shifting away from discounts means you need to provide an exceptional customer experience that keeps people coming back. 

Here are some ways to enhance your customer experience:

Personalized Comms:

Use customer data to personalize your communications. Tailored messages that reflect customers’ preferences and past behaviors can significantly increase engagement + loyalty. 

Exceptional Support:

Outstanding support can set your brand apart. Train your team to go above and beyond in resolving issues and providing support. Quick response times, friendly and human interactions, etc.

Most founders rave about their customer experience; most customers feel otherwise. 😏 

The bar is very low.

Surprise and Delight:

Implement surprise and delight tactics to create memorable experiences for your customers.

This could be as simple as including a handwritten thank-you note with an order or offering unexpected freebies.

These small gestures can leave a lasting impression and foster loyalty.

Build a Strong Brand Community:

Creating a community around your brand can reduce the need for discounts. When customers feel a sense of belonging, they are more likely to stay engaged and make repeat purchases. Here’s how to build a strong brand community:

Encourage Customer Feedback:

Actively seek feedback from your customers and show them that their opinions matter. Use surveys, reviews, and direct interactions to gather insights and improve your offerings.

Customers feel valued and more connected to your brand when they see their feedback implemented.

That’s it for this week!

Any topics you'd like to see me cover in the future?

Just shoot me a DM or an email!


Eli 💛

P.S. Looking for inspo on your next email/sms campaign?

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