Building a Discount Strategy From Scratch [Beware of Bargain Hunters]

A wise man once said, ‘I can’t live with or without you.’ An excellent way to describe an online retailer’s relationship with discount strategy.

Offering too many discounts runs the risk of devaluing your products and not offering any cuts to your profits.

You must pay attention to the benefit of discounting entirely, but you can only offer partial discounts because it’ll eventually impair your business. To discover the limits of a successful discount strategy, let’s find out what customers expect from a discount and how it influences their shopping behavior.

How discounts affect purchasing behavior?

Discounts have an incredibly positive effect on consumer behavior at first glance. But when you go deeper, you start seeing how discounting without a solid strategy can hurt profitability in the long run. 

Think of it this way. You recently moved into a new neighborhood and are buying groceries from the local supermarket. Since you moved in, the coconuts have been on sale. For two months, you bought them at $4 with a $2 discount. One day, you go to the supermarket and see that the coconuts are now sold at $6. Would you be happy that the discount lasted that long, or would you be dissatisfied that it ended?

Like every other shopper, you’ll be disappointed. The same rule applies to online shoppers. They get used to the discounted prices so much that they constantly develop tactics to benefit from them. 

Instead of developing discount tactics (that you can find in a million other posts), let’s uncover which tactics customers use to make the most out of discounts. This way, we’ll learn the point where a discount benefits your business as much as it is to the customer. But more importantly, we’ll learn what’s beyond that point. 

Marketers vs. Consumers

What marketers do

Offering discounts to abandoned cart owners.

What consumers do

Intentionally abandoning the cart with the expectation of a discount.

The latest shopping cart abandonment…