You may have considered SMS marketing because you’ve seen other retailers having success but your business doesn’t offer discounts.
Maybe you’re saying, “I don’t want to be a discounter” in my business and that’s prevented you from using it because that’s all you’ve seen from other businesses.
If this is how you feel, I can tell you, you’re not alone.
In fact, this is one of the top objections I hear for why businesses aren’t using SMS marketing in their business.
I get it, too. Nobody wants to be a discounter.
Discounting can have a negative connotation.
“Discount” means to deduct an amount from the usual price of something.
Maybe that’s not in line with your business or your brand.
When I was developing the mobile strategy for Cabela’s I came across this very challenge.
Cabela’s is not a discounter.
Yes, they have sales and promotions but they are strategic and for a reason…not just discounting for the sake of discounting, which is actually what many businesses owners feel they have to do if they want to use sms marketing.
Well, i’m here to tell you that you don’t always have to offer customer discounts if you choose to use SMS Marketing.
In fact, that’s actually a poor strategy, and yes, there is a strategy to discounting that can work in your favor.
Why Businesses Use Discounts?
Many businesses use discounted pricing to sell low-priced products in high quantities.
Strategically, it’s important to cut costs and stay competitive. Large retailers are able to demand price discounts from suppliers and make a discount pricing strategy pretty effective.
It’s usually impossible to compete with retailers based solely on discount pricing though, which is why it can be hard for your small business.
Aren’t All Discounts The Same?
What’s interesting is that many business owners don’t understand the various ways they could be using discounts in the first place. They automatically assume it means losing money.
Have you ever received a discount due to quantity?
These discounts can be cumulative, meaning that you give it to customers that place multiple small orders or even give them a free item after a certain number purchased.
The deli I go to gives me my 11th sandwich free once I’ve purchased 10. I have a little punch card that keeps track of my progress. Starbucks does the same thing after you’ve purchased 12 or so drinks.
Seasonal discounts are great for rewarding your customers who purchase during off-peak times. You see these a lot at the beginning of peak seasons.
Promotional discounts are short term to drive sales. Using promotional discounts too often though trains your customer to wait for the sale and that may damage the overall profitability of the product or service.
That’s why we never focus on always sending promotional discounts, because customers can become blind to offers if that’s all they receive.
Then there are loss leaders. These are the items you discount that are designed to bring customers into the store, where they will hopefully purchase more profitable products as well. Loss leaders should change regularly so you can keep customers coming back.
The Good Side of Discount Pricing
Loyalty from your customers is important. A study from Marketing Metrics showed that the probability of selling to an existing customer is 60-70%. The probability of selling to a new prospect is 5-20%.
If you leverage discounts to reward volume shoppers and repeat customers, you’ll create loyalty.
See below where Golf Galaxy gives away 1 dozen free golf balls when you buy 3 dozen personalized balls.
Loss leaders are effective for retailers who need to increase traffic in store. Promotional discounts used sparingly, offer temporary advantages including maximizing sales, revenue and profit.
Offering short term discount periods, more items can be sold, allowing a company to decrease inventory and temporarily raise revenues.
Think about seasonal items.
Have you ever purchased during the end of the season sale?
Which do you think costs more to the business, offering a short term discount to get rid of that seasonal inventory or paying to store it somewhere where it most likely won’t ever be sold?
If you said the get rid of the inventory you’re right.
The Bad Side of Discounting
Every business is different but there are some things to consider when thinking about discounting.
Consumers associate low price with with low quality. This applies even more when it’s from a brand the consumer isn’t familiar with.
Using discounts increases the chance that your product will be perceived as lower in quality. This may lead to you acquiring customers who make decisions on price alone and may find customers choosing competitors because of perceived quality.
Low prices may drive sales for a limited time, but that won’t build customer loyalty. At the end of the day competitors can match your pricing anyway. When you’ve dropped your prices, it’s sometimes even hard to raise them back up if you’ve created the perception of low quality.
The Key Ingredients To Discount Pricing
It’s important you use discounts sparingly and make strategic offers that align with your business goals.
It’s not smart to offer discounts that are redeemable on the busiest days of your week. You probably don’t need help on Friday-Sunday.
What about Monday or Tuesday though?
- Strategically timed offers can turn your slow days into—well—not slow days.
- Strategically timed offers can get your customers to spend more money than they typically spend when they visit your store.
- Strategically timed offers can get customers to shop with you more in an given time period than normal.
My favorite form of offers are cash back offers. This is when you use an offer to entice your customers to spend more than they typically spend with you.
You’ve surely seen this before. Here is an example I found from a clothing retailer Aeropostale.
You save $10, but only when you spend $50 ore more.
Aeropostale has likely seen that customers will spend a profitable percentage above $50 when having an offer like this.
I’ve helped retailers do this and increase their AOV by 10-20%.
If customers normally spend $100 with you, yet they’d spend over $150 if you gave them $20 back for it….you’ve just created an incremental lift of $30 per redeeming customer.
Not bad right.
6 Ways To Use SMS Marketing If You’re Not A Discounter
1. Promote other events
See below how Cabela’s is promoting entry into one of their seasonal giveaways. They are reminding subscribers that they can enter for a chance to win.
2. Promote your gift cards
If it’s a holiday, why not let people know they can purchase a gift card. Here’s Cabela’s rocking it again, driving gift card sales without discounts. Just at timely and relevant offer during the holidays.
3. Drive foot traffic with your event
See how Golf Galaxy is promoting their National Fitting Event to get fitted for new golf gear.
4. Promote exclusive opportunities
See how Dicks’ Sporting Goods is letting mobile subscribers know that they can get tips and training advice from Nike reps that will be in the store to chat with customers.
5. Create more engagement
Check out how Chipotle has mobile subscribers to reply to enter for a chance tow in a trip for two to the Cultivate Festival.
6. Promote new products
Right after the Super Bowl, Jack N the box lets customers to know they can come in and try their new burger.
As you can see, there are plenty of ways you can win with SMS marketing if you’re not a discounter.
Mix up your mobile messaging efforts to promote new products, cross-channel campaigns, events, exclusive opportunities and more and you can add a new engaging mobile channel to your marketing strategy.
What other programs have you seen that don’t include discounts that you like?