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Discounts can attract customers, but those same customers often steal profits from you and then leave you without their long-term conversion into a lasting customer base.
While the temptation to see a short-term increase in revenue is tempting and sometimes seemingly necessary, discounts create low-value customers who don’t care about brand loyalty or finding businesses whose products they support. causes.
Why discounts are tempting but harmful
Discounts are notorious for causing immediate sales inflation. If you’re in e-commerce, your case for discounts probably boils down to believing that your product is good enough to get consumers hooked on sampling, that discounts help achieve customer growth metrics, and that your annual figures must correspond to the previous one. years.
Customers who enter your brand through discounts offer the lowest lifetime value, however. Discounted customers are the least likely to repurchase, and if they do repurchase, it takes a very long time because they’ve also tried other discounted products or services before coming back to you. Over time, this can degrade brand equity because your customers have learned to think that the full price of an item should never be paid. So if you don’t make any more sales, your discount customer will stop and often not buy. This cycle forces you to run rebates on the same day, week, or month next year to keep your year-over-year numbers looking good in perpetuity.
Related: The Danger of Frequent and Predictable Discounts
Donation incentives are more effective
Customers who come into your brand through donation incentives, whereby your business donates a percentage of its sales to charity, are consistently the customers with the highest lifetime value, returning often and repurchasing. This type of activity builds your brand value and allows the company to truly and authentically appeal to the causes they support while sometimes leaving the charitable decisions to their customers, about which charities to support versus which others. . A donation model can help with real-world events that are relevant to what the brand stands for, enabling not just a short-term increase in sales, but meaningful help to those in need. Plus, authentic user-generated content explaining how the brand supports a favorite charity is positive marketing that money often can’t buy.
At the very least, replacing some discounts with donation incentives, or combining discounts with donations, often produces amazing results. For example, a “Get, Give” principle can be implemented to look something like “Get 10% off and give 10% back to charity”, which would traditionally work better than a 20% off code while continuing to attract discount seekers. as well as those simply interested in improving the world.
Related: 10 Ways Small Businesses Can Give Back Without Breaking the Bank
Apps can help you
There are a handful of donation apps that could be connected and used in your business, seamlessly connecting to Shopify websites. You can check out the app store associated with your e-commerce platform and choose the option that best suits your goals.
Using the app of your choice, you can select a handful of charities for your customers to choose from at checkout. You don’t have to select charities to make a long-term commitment to. You can choose seasonally for current causes that fit your marketing strategy. For example, you might want to donate to a mix of animal shelters in the event of overcrowding after a natural disaster, or give your customers the option to choose a charity that empowers women on International Day of wife.
Ultimately, a philosophy of donations rather than discounts drives both profit and purpose.
Related: Goodwill & Charity: There’s an App for That!