It’s only a month until the Silly Discounting Season begins. Click Frenzy drops on us on 12 November, followed by Black Friday on 29 November and Cyber Monday on 2 December. Christmas comes afterwards and the checkouts will be a-ringing.
However, according to Inside Retail’s Australian Retail Outlook, 49 per cent of Australian retailers consider discounting one of the biggest challenges facing them. Price cutting is a more significant concern than rental overheads and labour costs (which we’ve heard a lot about recently).
But it doesn’t have to be this way if we take the time to be a bit smarter about our discounting strategy. Let’s explore some strategies to make the Silly Discounting Season work in our favour.
The blanket X per cent off all stock is no longer a smart option. It’s a lazy grab for attention. Consider applying discounts to aged inventory only. Or dedicate different sales events to different product ranges. Or apply discounts only to hero products to get people into your ecosystem (e.g. discount the printer, not the cartridges). And if you’re advanced, create merchandise ranges for the Silly Discounting Sales period and introduce a new product range for the pre-Christmas, full-price, last-minute rush. Don’t give away the farm every time.
Customer data is the new gold. Luckily, customer data is easily traded-in for discounts. Rather than give discounts to every anonymous customer, only make it available for members or fans. This will grow the customer base you can directly communicate with after the sales event. Plus, you will be able to track the term profitability of customers over time.
It seems counter-intuitive. But why give away more than you have to? Only displaying discounted prices to visitors attracted by the offer will leave higher margins for oblivious but motivated customers. A great way of doing this is to attach discounts to coupon codes or create discounted landing pages for marketing.
In November and December, retail websites are the hottest media properties on the go. Let’s leverage that traffic. If you stock multiple brands, treat your website as a trading ground. Who is willing to pay for the home page exposure, offset the cost of the discount or form a partnership to email your customer base? Bonus points if they can provide an exclusive offer for you. In return, you will generate traffic, exposure and sales.
Is slapping a big red sticker the best you can do? Think about other value-adds like free delivery, extended warranties, gift-wrapping or installation services. Bonus points if it is added-value which is unique to you with a numerical value which cannot be directly compared or calculated. The perceived value of these value-adds is often higher than any markdown you can provide.
Free X with Y. Spend X save Y. It all amounts to bigger baskets and higher total margin. Think about who is going to be visiting, their task at hand and make it easy to spend with you.
Blasphemy! But seriously, whether you are playing the game or not, the Silly Discounting Season is here to stay. It’s no longer whether you will play the game but whether you do it in a smart way that will retain margin and build long-term customers.
Before you put that “30 per cent off site-wide” banner up, think how you might experiment with smarter discount strategies. I hope that this discounting season moves from being a big concern to being a significant opportunity for your business. Good luck!
Nathan Bush, Founder, 12HIGH
This story forst appeared on our sister publication Internet Retailing