What Separates an Effective Discounting Strategy from a Disastrous One

Most industries experience seasonal sales slumps – at some point in the year, sales will naturally start to curtail, and the natural organizational response is to accept this seasonality, pull back on sales and marketing efforts, and wait demand to pick back up. This is a huge mistake.

The seasonal sales slump may very well be an organization’s best opportunity to inject innovation into their sales and marketing. If you’re looking for what you can do to innovate in your sales and marketing, look no further. We have three ideas for innovating during a low sales season; in our last post, we discussed surveying your customers, employees, prospects, and users; before that, we talked about ideas for launching co-branding and co-marketing partnerships. To finish the series, we’ll speak through strategies very familiar to most organizations: discounts, rebates, and promotions.

Strategy 3: Discounts, Rebates, and Promotions

The most tried-and-true tactic for driving business during the low season is also the one most in need of innovation. Discounting, rebating, and other related promotions are the go-to strategies for hordes of consumer-facing and B2B brands when faced with a low sales season. And while these can certainly be effective strategies, lowering your price to drive sales comes with a number of consequences to be considered:

• Lost Brand Equity: For premium or luxury brands, there is a real threat that discounting can cheapen the quality of your brand. There’s a reason why Apple rarely chooses to offer sales or discounts.
• Creating False Customer Expectations: Most businesses are looking to develop repeat customers. When those customers buy into your brand at a price point lower than your market value, you run the risk of either losing them or having to keep your prices artificially low when it’s time to renew.
• Costs That Add Up: The price drop isn’t the only money you lose when offering a discount. You also have to invest time, energy, and dollars into promoting your discount, and this collective investment (discount + promotion) can feel like a lot, especially if your promotion is non-targeted, non-specific, and unsuccessful.

Does this mean that low season discounts or rebates should always be avoided? Of course not – why else would I have opened this series talking about a rebate campaign? It just means that discount and rebate promotions require a greater amount of consideration and ingenuity.

A few lessons we’ve learned for turning a low season discount or rebate program into a predictable source of revenue and brand enthusiasm:

Target Your Promotions

As appealing as holiday car commercials or box store newspaper ads may be, the best bet for achieving success is to make your discount promotions as targeted as possible. For Airstream’s Winter Wanderland Year-end Promotion, we combined personalized email marketing to existing prospects in the bottom of the funnel (for whom we already had information) with targeted paid social and PPC advertising toward middle-of-the-funnel prospects (who were not yet in our system) in order to maximize conversions from the total pool of potential customers who would truly be ready to buy once they were offered a discount. Had we made this a more broad, non-targeted offer, it may have had a negative impact on revenue from top-of-the-funnel prospects who were still early in their decision-making process, but would eventually be willing to pay the full price once they’ve reached the decision-making stage.

Don’t Offer Your Premium Products

Airstream is, without question, a premium brand among travel trailers. They don’t use the Winter Wanderland campaign to help sell the newest model; instead, they leverage it as a means of clearing the previous models off their distributors’ lots to help make room for next year’s model. This allows them to discount their products without cheapening the prominence of their newest model.

You don’t have to be a manufacturing company to adopt this approach. Most organizations have a number of supplementary services that could be used as promotional offerings without negatively affecting the quality of your primary (or premium) revenue streams.

Build Momentum Over Time

The reality is that, as with most innovations, your first low season promotion is going to be a learning process. Success requires commitment – take the lessons you learn from the first time you run your discounting campaign and build on them the next time you run it. It took three years to really generate the momentum behind Airstream’s Year-end Promotion that we knew we could achieve, and now it’s one of the most successful campaigns the company has ever run.

Great Organizations Don’t Take Breaks; Neither Does Innovation

By the end of this series, you should have come out of this with a handful of actionable low season marketing strategies you could begin developing as soon as your low season comes around. But this list is far from exhaustive. The most important thing you should take away is that the seasonal sales slump is a time for innovation, and the extra time available to your sales and marketing teams should be dedicated toward developing new strategies for growing your business.

Sales and marketing innovation is a seasonal ramp-up exercise, and its impact shouldn’t be neglected or undervalued. You will be surprised at what results you can achieve when you stop setting a low bar for low season and aggressively pursue a path of innovation.

Innovation Strategies for a Slow Sales Season Blog Series

Part 1: How to Create a Successful Co-branding Program during Your Slow Season

Part 2: Can’t Find the Time for Stakeholder Surveys? Try Slow Season