Discount is like a double-edged sword

I know a high-ticket e-commerce company that sells a unique type of at-home health testing, priced at ~$600 U.S. a kit.

Their primary marketing strategy is…

Promote a flash sale with a 40% discount every two weeks.

The flash sales will run 4 to 5 days and end with 3 deadline extensions.

The strategy worked… until it didn’t.

Because the subscribers picked up a few things quickly:

1) You don’t have to open emails.

Since every email is promotion-driven with very little value for the readers… there’s no point in opening/reading any emails unless you’re ready to buy.

2) You know there’s no real urgency.

The key element that makes flash sales so effective is the built-in urgency, “Door closes in 3 days!! Take action NOW!”

But here…

The prospects know the next flash sale is right around the corner.

(not to mention the DL extensions…)

Therefore, why bother?

3) You stop believing in the company.

Fake deadlines leave a bad taste in your mouth – especially when it’s used over and over (and over) again.

It’s like The Boy Who Cried Wolf…

You stop believing fast.

4) You will never buy at full price again.

The goal of a discount is to sweeten a deal by comparing the new offer with the original cost (aka price anchor).

But when a company promotes heavy discounts every other week…

You know that the original price tag is just a joke.

Therefore…

The company “anchored” their product to a discounted value.

No one will want to buy at full price again.

(Giving credit where it’s due: I learned this last concept from Daniel Throssell’s AiC newsletter.)

The result?

The company had to run even MORE promotions to compensate for the less effective flash sales. (Downward spiral 📉)

Not to mention that the 40% discount code became unattractive quickly, forcing the company to run a 78% discount on 11.11 this year.

(I wonder… maybe they’ll run a 90% off promotion this BF/CM? 🤔)

The worst part is…

These discounts take away most of their margin…

…making it harder to profit.

And this is why I say:

Discount is a double-edged sword. Use with caution.

So, what should you do instead?

To be continued…
– WYH