Avoid the vicious cycle of just discounting

Discounts, all merchants do it and consumers love a bargain. But, based on our research, where we asked 4,000+ consumers about how they felt about big discounting periods and events, we found:

Why you should avoid discounting tactics

Discounts damage your brand image with 58% saying that the deals and offers provided during major discount events impact their trust in brands. It also alienates your existing customer base as 59% feel that brands focus on winning new customers over making their existing customers feel special.

In the long run, it doesn’t make new and existing customers loyal and reduces their lifetime value with them less likely to become repeat purchasers. Big discounting events can make them feel undervalued, underappreciated, and deprioritized.

Avoid using discounts only and use your loyalty program* to make your customer base more loyal and build brand trust with new customers

*Please check your price plans for eligibility for the following features and functionalities

1. Give loyalty points instead of discounts and run double point events

73% of consumers said loyalty points that they can redeem against future purchases would encourage them to purchase during discount periods.

To attract new customers you should avoid store-wide discounts and focus on reductions of specific collections to get them through the door. Market your loyalty program to these new customers so they can earn points for interacting or purchasing from you, which they can redeem on future purchases when the sales are over.

For your existing loyalty program members, run double point events or apply bonus points to the same products you’re applying discounts to for the wider market. This will give them the feel good factor and shows them you care about them as much as new customers.

Farmacy Beauty, for example, runs promotions where program members get triple the points for every $1 they spend.

To translate the points earned into future purchases don’t forget to make redemption easy.

  • Use loyalty emails or loyalty data to trigger your ESP email or SMS flows to remind your customers about the loyalty points they’ve earned
  • Add a points slider to your checkout to allow customers to redeem their points on their transactions. This both improves the check-out experience and increases their average order value (AOV) as they’ll use points or rewards to buy higher value items that they wouldn’t have otherwise

2. Early access to sales and new products

79% of online shoppers say they’re loyal to brands if they can unlock exclusive benefits. Supplement discounts with experiences for existing customers. From that, 70% of customers say that early access to sales and 69% said early access to new products would motivate them to make a purchase during discount periods.

Start by offering your most valuable customers early access to your big event sales or to exclusive products. If you haven’t yet, set up a post-purchase referral campaign to drive customer acquisition through your loyal customers. This on-site notification will show shoppers the points they’ll get for making a referral which will motivate them to share the positive experience they’ve had with their friends. 

To attract new customers to sign up for your loyalty program, use post-purchase campaigns to increase sign-ups. Market the benefits of your loyalty program, for example, the tier-specific benefits you have, which could include early access to sale events or new products.

The sports and lifestyle brand, ‘47, have given their program members early access to one of their most sought-after product drops. And, The Pulse Boutique has previously given its “pulse perk members” exclusive access to a 50% BOGO sitewide sale. 

Pulse Perks Case Study Img

3. Free or discounted shipping

76% of customers said free or discounted shopping would encourage them to buy from a brand during discount periods. It’s no wonder free shipping is also in our top 10 list of discounts used by merchants across our loyalty platform.

Free shipping allows you to replicate the feel-good factor of a financial reward without cheapening your products or brand by applying discounts. The best thing is this incentive can be offered to both new and existing customers. 

For loyal customers, be sure to vary your shipping perks. Rather than offering free shipping as a broad stroke perk, give customers different options based on their previous loyalty to you. For customers who have only purchased from you once, add a sitewide discounted shipping perk. But, for long-standing members of your loyalty program, motivate them to purchase by giving them entirely free shipping.

Though there are still financial implications to providing free or discounted shipping, segmenting your customers allows you to limit the impact, while still providing a compelling alternative incentive to sitewide discounts.

The healthcare brand, Happy Mammoth, gives customers in their second tier free shipping on orders over $90. But, when shoppers move into the Gold and Insider tiers they get lifetime free shipping on all their orders. 

4. Contribution to a charitable initiative

Your brand values matter, it is the reason customers continue to buy from you and it will also be the reason for customers to be attracted to your store. 62% of customers said they would purchase from a brand if they could contribute to a charity or initiative that’s aligned with their personal values. But, 60% of customers felt that brands focus too much on selling products over key discount periods rather than supporting causes or living their values.

This means there’s an opportunity here to exceed customer expectations by using custom rewards to demonstrate your commitment.

Pacifica Beauty gives customers loyalty points for returning empty packaging back to the brand to be recycled. 

How to avoid discounting example: Pacifica Beauty Recycling

And, for every 10 loyalty points a customer earns, the clothing brand, Zorali, plants 10 trees.

How to avoid discounting example: Zorali Loyalty Program

5. Use key discount periods to build a loyal customer base

Key discount periods aren’t only an opportunity to acquire new customers. They’re also prime time to deploy alternatives alongside discounts that protect your profit margins, market your loyalty program to new customers and strengthen your existing customer relationships. Plus, these alternatives will build the LTV of your existing customers over time.

More importantly, discount strategies that historically might have only made a short-term impact will instead benefit your brand long-term and make your customers more loyal if used alongside the alternative incentives mentioned above. Luckily for you, each of which can be implemented through a loyalty program.

Read our Discounting playbook: part 2 to learn more and visit our Help Centre to optimize your loyalty program and put loyalty at the heart of your discount tactics and strategies.

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