How Ecommerce Discounts Hurt Customer Loyalty

Have you heard of a little event called Black Friday? Cyber Monday ring a bell? Other than being a day when normally level-headed people start brawling over a pair of Nike sneakers, it’s also when B2C marketers go a little crazy with the discounts in a bid to boost sales in the run-up to the holiday season.

Every year, the discounts get bigger and the sales period gets longer. Amazon now has a  Black Friday week. While JCPenney, Macy’s and Lowe’s were just a few of the retailers that held their own “Black Friday in July” sale to try to compete with Amazon in the offseason.

As a marketer, it’s tempting to start discounting your products so you can get some of that lucrative Black Friday/Cyber Monday business. But you shouldn’t do it without thinking.  

That’s because ecommerce discounts don’t always work. In fact, they can actually backfire spectacularly for your B2C brand unless it’s part of a solid, tried-and-tested discounting strategy.

You’ll never beat Amazon (and you shouldn’t try)

Just because Amazon offers crazy ecommerce discounts each year, doesn’t mean you should. If you’re trying to compete with Amazon by copying everything they do, you need to stop that now.

People choose to shop with Amazon because of the competitive prices, wide selection of products, familiar (and trusted) brand name, and an impressive range of delivery options. You’ll never be able to compete with Amazon because all of this is incredibly expensive! So stop trying.

Instead, you need to focus on offering something Amazon can’t:

  • Create a unique customer experience –– on your website and in your marketing communications
  • Personalize communications in a relevant way, and make sure you do it across every channel and on every device
  • Create a strong brand identity that fits with your mission statement, and communicate it clearly
  • Build trust with your customers in every interaction
  • Engage with your community both in-person and online

You’ll notice that none of these ideas focus on price or discounting.

You devalue your products

Have you ever clicked on a website and been bombarded with discount offers? First, there’s a pop-up, then there’s a banner, then you see a retargeted ad with a coupon code, and then you get an email offering you a discount. Sounds a bit desperate, doesn’t it?

Take a look at Lowe’s homepage. There are discounts everywhere – 35% off appliances right at the top of the page, then a whole line of money off other items just below, as well as “Deal of the Day” and “Pro Pick of the Week”. It may be part of a clearance event, but it feels like overkill. Why do they need to get rid of so much stock?

And everyone is discounting products! In fact, 97% of retailers offer discounts, according to one survey. You’ll just be another one of the many ecommerce brands out there desperately trying to win customers by any measures or annoying them by putting too many discount popups on your site. You won’t make your brand stand out in what’s an already crowded marketplace.

If that’s the first experience a customer has with your brand then at best, they’ll buy something from you once because it’s on sale. At worst, they’ll wonder what’s so wrong with your brand that you have to resort to these measures to win customers. Studies have shown that the greater the discount on a product, the lower the perceived value.

Kohl’s offers discounts ranging from 10% to 30% on its homepage (it’s pretty much all you can see). There are so many discounts it makes things confusing for the customer –– which one do you go for, and what are they all for? It’s both a bad customer experience and a bad look for your brand.

You want to make customers fall in love with your products by building up a relationship with them, not devaluing your products by offering them at bargain prices. And if people won’t buy your products without a discount, then maybe you need to rethink your pricing strategy.

You won’t win loyal customers

Discounting can be a good way to attract new customers as part of an initial marketing campaign, but it’s not always the best way to encourage a repeat purchase. If customers are choosing to shop with you based on price, they will wait until there is another sale –– or you send them another discount code –– before they shop with you again.

These aren’t loyal buyers. They likely won’t read your emails, won’t show their love for your brand on social media, won’t tell their friends and family about you, and they won’t come back unless you have another really great sale. You’ll waste all your time and money on marketing to these customers, but they won’t care, and it won’t make a difference to their likelihood of coming back again.

If you want to build up a base of loyal customers –– who are much more valuable to your business than one-off shoppers ––  then you need to provide the best customer experience to differentiate your brand. You can learn a lot from some of the leading brands who have rabid fan followings.  

Tactics you should use instead of discounts

Instead of always going straight to the discount before a customer has even decided if they like your products, there are other ways you can hook customers in and encourage them to buy:

  • Offer other incentives such as free shipping or a referral program
  • Provide money off shipping, rather than on the products
  • Reward customers for second purchases
  • Create loyalty programs with rewards your customers care about

If you use these options instead, you’ll create truly loyal shoppers who come back to shop with your brand time and time again. You’ll attract fewer voucher vultures who are only looking for the best deal and may never be seen on your site again. With the right strategy, you can drive true customer loyalty.  

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