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Disadvantages of Discounts: 18 Reasons to Think Twice before Slashing Prices

5 minutes

Discounts are a staple of an effective marketing strategy. They can improve sales and help drive revenue. When used correctly, discounts generate buzz among customers. However, there are disadvantages of offering discounts.

The disadvantages of discounts are something you must consider when putting your marketing strategy together. It’s crucial that you avoid the dark side of discounts. In doing so, you can ensure your e-commerce store’s long-term sustainability and success.

In this article, we are going to take a deep look at the disadvantages of discounts. In particular, we are going to focus on what you need to do to avoid getting caught up in the dark side of discounts.

First Off, Why Offer a Discount?

Of course, discounts aren’t all doom and gloom – they are a highly effective sales tool for a majority of companies.

Here are a few reasons why so many brands rely on discounts:

Discounts can quickly boost sales (especially of specific products)
Discounts can help you move excess inventory
Discounts help create demand for new products
Discounts can attract new customers
Discounts help position your brand in specific demographics

As you can see, there are various reasons for discounts. On the flip side, let’s take a look at 18 disadvantages of discounts, that might make you think twice about slashing your prices.

18 Disadvantages of Discounts that Could Affect Your Sales

#1 Customers become reliant on promotions

In-store promotions trigger a 91% purchase rate among shoppers.

That sounds great, doesn’t it?

Well, not so fast.

You see, while promotions are great, customers may become too reliant on them. As a result, they will think twice before purchasing. Unless they desperately need the product, they would rather wait until your store offers a promotion. When customers figure out your timing, sales will plummet outside promotional periods.

So, what can you do about it?

Use promotions sparingly. Most importantly, keep shoppers on their toes. Try to avoid making them predictable. Making discount events unpredictable helps even out your sales so that customers won’t become overly reliant on your sales promotions.

#2 Customers expect online promotions

89% of surveyed shoppers indicated that they expect online promotions. All right, so we know that shoppers want promotions. Nevertheless, customers expect you to run promotions. If you don’t, your overall sales may suffer as a result.

While that’s perfectly fine, your customers may ultimately delay their purchase decisions until you discount items.

Grow your sales with high-performing deals.

So, what can you do about it?

Avoid storewide discounts as much as possible. Slashing your entire inventory is a sure-fire way of getting shoppers to sit on their hands until the next time you slash everything. Therefore, the best approach is to discount individual items every so often.

Again, unpredictability is your best weapon. If customers have no idea when you’ll slash items, they’ll think twice about delaying their purchase decisions. If anything, a discount will seem like a pleasant surprise.

#3 Customers will think your products are “cheap”

According to research, 82% of shoppers indicated that quality plays a key role in their purchase decisions.

What does this mean?

Well, there is an unfortunate perception that steeply discounted items are “cheap.” In other words, they offer inferior quality. In contrast, luxury items are often cost-prohibitive due to their superior quality. The fact is that discounting items too often can create a negative perception in consumers’ minds.

So, what can you do about it?

Telling your consumers why you’re slashing prices is a good way of helping maintain a positive image. For instance, telling customers, you’re discounting last season’s collection to make room for the new season’s products makes sense. Consumers will see the logic in your approach. Above all, you can introduce new items at a regular price.

#4 Discounts seem gimmicky

A 2019 report indicated that 72% of respondents wanted to see their favorite brands advertise discounts on social media. On the surface, that assumption makes sense. Folks like to see discounts and special offers in their social media feeds. It makes them feel special to know that they have access to special deals and offers.

However, these discounts and offers may also seem gimmicky. In some instances, it might seem like clickbait. In other instances, special offers on social media may seem like they’re too good to be true.

So, what can you do about it?

Offer customers the real deal. Suppose your social media feed advertises a discount. In that case, customers should expect to see it when they log onto your e-commerce site. You can overcome this disadvantage of offering discounts by offering realistic deals.

#5 Consumers may get mixed emotions

Research shows that 40% of shoppers feel smart when they get the best deals.

Fair enough. But what happens when shoppers don’t feel like they’re getting the best deal?

When you overdo discounts, consumers stop feeling smart. They become dependent on your deals. As a result, you take away the rush that comes with getting the best possible deal.

So, what can you do about it?

Surprise your consumers. Use discounts sparingly. When you do, tell your customers they can get this great deal for a limited time only. Then, mean it. Don’t be afraid to let deals expire. When deals go unclaimed, customers develop FOMO (fear of missing out). They might miss out the first time. The next time though, they had better be ready!

#6 Consumers may feel disappointed

Studies suggest that customers get a rush when they find great deals. In fact, a $10 coupon can raise oxytocin levels by as much as 38%.

Yikes!

In contrast, consumers’ highs may come crashing down when you don’t offer a discount. The rush that comes with getting a great deal goes away when you remove discounts.

So, what can you do about it?

Some of the most successful brands offer a “deal of the day.” The secret to making this strategy work is to offer different products every time. Thus, consumers will have no way of knowing what products will be on sale on any given day. This uncertainty builds expectations and creates a high when a specific product is on sale.

#7 Your deals must compete with rivals

According to Google, folks use their smartphones to shop and find discounts. All right, that seems fair, right? However, it’s not quite so simple. Your deals have to compete with your rivals.

So, what does this mean?

It means you risk getting into a never-ending arms race with your competitors. You have to find bigger and better deals to outperform your competition constantly. This situation is one of the biggest disadvantages of discounts in e-commerce because you’ll never truly be able to differentiate yourself from the competition.

So, what can you do about it?

Successful brands know that using discounts is about rewarding customers instead of enticing them. You open the door to trouble if you’re using discounts solely to attract new customers. Strive to position your brand on value. Then, use discounts as a treat for your loyal customers.

#8 Using discounts as a strategy means you must maintain constant communication

Research indicates that almost 50% of smartphone users around the world want to get real-time promotions. This figure means you must engage in constant communication with your customers. Otherwise, other brands may beat you to the punch.

Keeping constant communication isn’t necessarily a bad thing. However, you may not have the time or the resources to maintain ongoing communication with your customers. This situation may pose a needless burden on your e-commerce site.

So, what can you do about it?

Automation is the answer to one of the most relevant disadvantages of discounts in e-commerce. You can use automated tools to send out daily emails with discount codes or Shopify apps to post daily deals.

#9 A solid discount strategy requires your e-commerce site to focus heavily on mobile devices

Mobile e-commerce traffic surpassed desktop transactions way back in 2017, and it has been growing ever since. This phenomenon means your e-commerce site needs to get with the times or fall behind for good.

So, how has this trend become one of the disadvantages of discounts?

This trend means you must invest in ensuring that your marketing strategy focuses on mobile devices. Above all, it’s about providing a flawless user experience. If your brand relies on discounts as a marketing strategy, neglecting mobile user experience will become a considerable drawback.

So, what can you do about it?

Focusing on user experience is a key component of your marketing strategy. While not all e-commerce sites can invest in a mobile app, you can get over one of the most significant disadvantages of discounts using a highly responsive Shopify theme.

Also, using SMS messages can engage customers on their smartphones a long way. Sending discount codes by SMS can boost your discount strategy on mobile devices.

#10 Your discount strategy may become too reliant on a single communication channel

Using a discount strategy often means focusing on channels that generate the most communication. For instance, your e-commerce site may become too reliant on social media to communicate with customers. However, focusing too much on a single channel may cause your e-commerce site to miss connecting with customers elsewhere.

According to research, 91% of Americans like receiving promotional emails. As a result, your focus may be too narrow on other channels such as social media. Getting a broader picture of where your customers are will help you optimize your message.

So, what can you do about it?

Understanding your target demographic will enable you to visualize where your customers predominantly meet. Perhaps they’re more active on social media. Perhaps they prefer email communication. Perhaps they like a little bit of everything. Understanding your customers’ overall preferences will help you tailor your discounts so that they hit home every time you run special offers.

#11 Your brand may become a slave of email marketing

On the subject of email marketing, recent data shows that 61% of consumers actually like receiving weekly promotional emails. Additionally, 28% of consumers indicated they would like to get more frequent promotional emails. This figure underscores one of the biggest disadvantages of discounts: becoming a slave of email marketing.

You see, many brands fail to diversify their marketing approach. They figure customers like to get promotional emails packed with coupon codes. However, this approach essentially puts all your eggs in one basket.

So, what can you do about it?

Ideally, you want to diversify your marketing approach. Sending the same coupon codes by email and posting them on social media won’t cut it. Instead, try to post deals on social media and offer special deals or offers to email subscribers.

#12 Your brand may not be able to sell anything at full price

Data from PWC shows that 58% of consumers expect to receive discounts, promotions, and coupons. All right, so there’s nothing wrong with pleasing customers, right? Well, you’d better think twice.

When customers actually expect discounts, their purchase decisions become reliant on getting the deals they want. Over time, they will expect more and more deals. Ultimately, your brand may become unable to sell anything at full price.

So, what can you do about it?

One interesting tactic is to schedule offers. For instance, running weekly promotions builds anticipation. Customers will know that you’re running offers every Friday, for example. The secret lies in ensuring that you never discount the same items consistently.

#13 Effective discount strategies require clever marketing angles

An interesting study states that 64% of consumers open emails based on the subject line. This point is quite interesting since most brands believe discounts sell themselves. A common misconception is that slashing prices alone entices customers to purchase. However, this assumption does not come without its issues.

This disadvantage of discounts lies in neglecting creativity. Specifically, brands tend to feel that discounts alone are enough to entice shoppers to purchase. It’s a sort of “if you build it, they will come” mentality.

So, what can you do about it?

Focusing on your target demographic is crucial. For instance, younger customers like more interesting angles of branding and promotions. In contrast, older customers may prefer more insightful marketing campaigns. Ultimately, please avoid believing that discounts sell themselves.

#14 You may lose customers because the competition offers better deals

According to data, 80% of consumers will switch brands if they can get a better deal. In short, consumers will go wherever they can to find better savings.

What does this mean for your brand?

Trying to outcompete your rivals may lead your brand to slash prices continuously. Eventually, you may be unable to generate much profit. This situation is like a never-ending arms race. The race ends until one or all brands are left in the dust.

So, what can you do about it?

Don’t compete! Let your brand speak for itself. Most importantly, use discounts as a way of rewarding your loyal customers. Use special offers as a way of saying thank you for their preference. After all, every customer who purchases from your brand is one the competition does not get.

#15 Your brand relies too much on social media

Approximately 72% of shoppers in the US prefer promotion content over email instead of social media. Just 17% indicated they prefer social media. This figure certainly seems surprising, especially when considering social media’s overall popularity.

But here’s the thing: social media is meant to be fun. While social media can help businesses, most folks enjoy social media for what it is. When it comes to business, most people prefer email. After all, email is a highly versatile tool that helps businesses consistently reach their customers.

So, what can you do about it?

Use social media for advertising and showcasing your brand. Nevertheless, social media is a tool that drives customers to your e-commerce site. Moreover, social media can help you build your email list. Your email list can then serve you to promote special deals, offers, and discounts.

#16 Discount strategies fail because discounts are available to everyone

According to Nielsen data, 77% of consumers want personalized promotions.

Aha!

One of the biggest disadvantages of discounts is making deals available to everyone. When everyone gets a discount, the discount itself loses the allure you intend it to have.

Think about it.

How special do you feel if everyone gets the same deals and offers?

Not very much.

So, what can you do about it?

Segmenting discounts is a great way of ensuring personalization. For instance, you can offer new subscribers a 10% welcome discount.

Long-time customers, however, can get exclusive early-bird access to special sales. Returning customers may also qualify for additional discounts on their next purchase.

#17 Using a cookie-cutter discount strategy doesn’t work

Personalized emails can improve click rates by 27% and boost open rates by 11%. This figure is truly interesting because most brands assume that people open every email. However, that is simply not the case. First, people open emails with creative subject lines. Then, they click on links when promotions are enticing.

Thus, using a cookie-cutter approach does not work. Merely offering discounts by saying, “hey, here’s a discount,” is not going to cut it. Customers want to feel that you’ve taken the time to consider their particular needs and wants.

So, what can you do about it?

Something as simple as adding the customer’s name to an email can make a huge difference. Also, creating specific product recommendations makes customers feel like you’re paying attention to what they want.

Ultimately, suggesting offers and deals based on customers’ search patterns can help you make a huge difference in their perception of your brand.

#18 A lack of personalization derails your promotions

Speaking of no personalization, 70% of brands don’t use personalized emails even though personalized emails are six times more effective in boosting transaction rates.

What does this mean?

If you’re not personalizing communication with your customers, now is the time to do it.

So, what can you do about it?

Email and communication apps on Shopify can help you build custom emails. These emails can tailor communication to suit individual customers’ needs. Ultimately, personalizing your communication will make a significant impact on your brand’s positioning.

Bonus: PickyStory lets you Bundle Products Without Offering a Discount

We know discounts aren’t for everyone, and your brand likely has highly specific discount requirements and strategies when it comes to your sales and promotions. That’s why, with PickyStory, we’ve made discounts optional, and extremely flexible.

If you wish, you can use PickyStory to simply bundle products together, selling them at the regular combined price of the individual products you bundle. Alternatively, you can choose from a broad spectrum of discount types, including:

Offering a % discount when a qualifying bundle is purchased
Offering a $ discount when a qualifying bundle is purchased
Adjusting bundle prices based on the variants selected
Selling a bundle for a fixed price
Offering tiered discounts to encourage bulk purchases
Combining multiple deal discounts into the same order

PickyStory can become your most effective weapon in building killer deals and promotions. Plus, personalizing your deals will make customers feel truly special and can have a significant impact on your conversions.

Grow your sales with high-performing deals.

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Published on August 11, 2022
Topics: Sales and Conversions

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Disadvantages of Discounts: 18 Reasons to Think Twice before Slashing Prices

Table of Contents

First Off, Why Offer a Discount?

18 Disadvantages of Discounts that Could Affect Your Sales

#1 Customers become reliant on promotions

#2 Customers expect online promotions

Grow your sales with high-performing deals.

#3 Customers will think your products are “cheap”

#4 Discounts seem gimmicky

#5 Consumers may get mixed emotions

#6 Consumers may feel disappointed

#7 Your deals must compete with rivals

#8 Using discounts as a strategy means you must maintain constant communication

#9 A solid discount strategy requires your e-commerce site to focus heavily on mobile devices

#10 Your discount strategy may become too reliant on a single communication channel

#11 Your brand may become a slave of email marketing

#12 Your brand may not be able to sell anything at full price

#13 Effective discount strategies require clever marketing angles

#14 You may lose customers because the competition offers better deals

#15 Your brand relies too much on social media

#16 Discount strategies fail because discounts are available to everyone

#17 Using a cookie-cutter discount strategy doesn’t work

#18 A lack of personalization derails your promotions

Bonus: PickyStory lets you Bundle Products Without Offering a Discount

Grow your sales with high-performing deals.

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