The Case for NOT Offering Holiday Discounts

All right, guys. I’m going to ask you to indulge me for a few minutes of corporate-speak & a little bit of a shift from the norms of retail’s holiday season. OK? Let’s press on.

Many of you have planned out a stellar holiday strategy to generate awesome sales, give your existing and new customers a memorable shopping experience, and build your business into a destination for amazing, one-of-a-kind products. And oh yeah…you want to make money. (It’s OK to say it. We’re all friends here.)

Here’s what the average bigger-box retailer may do:

• Offer specific items at “insanely low prices” (if you really look closely, the quality of these items is totally proportionate to the pricing, but that’s another topic for another time).
• Offer a high-level transaction discount ( like 50%) for a set time frame to their “best customers.”
• Give dollar off discounts for high total sales (like $20 off a sale of $150 or more, or something like that).
• Offer lots of *free* gifts with purchase (like a cosmetic bag to go with a makeup set or slippers to go with a set of PJs).

Here’s why they work: They are designed to serve 1000s of customers, 1000s of transactions, and millions of dollars in sales. This is not you. They work because they can afford to take 50% off a sale when they’ve got 25,000 sales generating per hour. This is, also, not you. They’re also big enough that they can purchase or create inventory for a low overhead, and make more margin on a per item basis. (this is a fancy way of saying that they can make a product for a very cheap cost, so even if they take a high discount, they still profit.) This is, again, not you.

So what should you do?

I’d encourage you to be strategic when looking at your holiday promotions. Ask yourself if
they benefit you & your business as much as they benefit your customer. If the answer is no, redesign it. Remember what your customers are looking for during the holiday season–a quick, simple, memorable experience.

Here are a few things you can implement, and why they’ll work to your benefit throughout the peak season:

• Free Shipping–although this is a bit of a cost for you, you could offer it for one of the last-minute crunch weeks in December to get all the last-minute shoppers. Shipping costs can be a deal breaker for some people–give them a little “gift” to encourage them to shop with you and cross as many people off their holiday shopping list as they in can in that short window. Put yourself in their position. Wouldn’t you love to knock out your shopping list, eliminate the stress, and save money all at the same time? Heck, yeah, you would! Another option may be to offer free shipping when your customer reaches a certain dollar threshold. The bump up in sales will compensate your cost to ship.
• ‘2-for-$xx’ deals–offering items at a ‘2-for-$xx’ price may seem like a discount, but really, it’s giving you a major opportunity. You get to clean out your inventory (because I’m sure you’d like to use those dollars for the new products you’re launching in the new year, right?), and you get to sell more units to less people. Think about the gain in productivity and in-house cost savings: imagine processing, packaging, and shipping 10 transactions at one unit each, and then imagine selling the same amount of goods but only having to do that 5 times. I know which one I’d rather do, especially during the holiday season!
• Offer personalization or some other meaningful add on to best-selling items–personalization may seem a little “last year,” but for the average shopper it’s an easy way to create a memorable gift. People are shopping with you because they want to give a gift that’s special and unique, and they’re willing to pay for it. Think about ways you can leverage that for your own business.

Now, of course there are exceptions to every rule, and I’m going to leave you with one. Every box you ship in December should have a discount coupon in it for January shopping. Why? Your sales will be scarce when the holiday rush comes to a close, people are tired of shopping, and there’s no more money to spend. A sale with a discount is better than no sale at all.

Here’s wishing you a productive, fantastic holiday season!

{Featured image via Papermash}