The Dangers of Discounting Your Products

Sweet Tooth

Let’s find out who actually benefits at each stage in the

discounting process.

The first sale will attract new customers to a brand, which creates more opportunity for conversion and a greater chance of increasing the repeat customer rate.

Customers benefit from lower prices, which increases the perceived value of the products in their eyes.

Revenue will increase following the first sale, which increases the customers’ chances of the merchant holding another sale to continue this revenue growth.

Customers will begin to expect sales and discounts from the brand due to their initial overwhelmingly positive interaction with the brand.

This puts pressure on the merchant to either hold another sale or risk losing repeat customers.

The lack of continued discounts will result in fewer sales as customers take their business elsewhere. The business the initial sale created was extremely price sensitive and shoppers will jump to a competitor when that brand is no longer the cheapest option.

More sales are offered in quick succession in an effort to reaffirm straying customers’ allegiance. Sales begin to incrementally increase as a result of short bursts of revenue.

Customers are able to get more product for less money without increasing purchase frequency.

The constant stream of sales increases revenue but evaporates your margins. This lack of profitability is not sustainable and customer experience suffers as a result.

Customers may begin to question why the brand’s products are constantly discounted, damaging the brand’s reputation and taking shoppers to competitors.

https://www.sweettoothrewards.com/