17: Stop the Discount Spiral: How to Drive Sales Without Slashing Prices

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Started. Hello everyone and welcome back to the Product Growth Lab podcast. This week we're talking about something that I've wanted to talk about for a long time, and it's the fact that you don't have to do a discount to get more sales. If you feel like the only thing you can do in your business when you desperately need another sale is to discount, this episode is specifically aimed at you.

Especially because I literally just put my listing Etsy shop on sale last night. 30% off. I'm considering putting it to 40%. I don't know how well this is gonna work for Etsy, but—

Yeah, I'm not saying that you can't ever do discount. Nope. And there is tactical ways to do that, especially Etsy. I don't, I'm not saying that like I know anything about Etsy's algorithm, but I know it seems to give you a boost when you do a sale. I've noticed that myself. So, we're not saying that you can't ever do a sale, and there are times when it makes sense. But if you need, if you feel the need to put your shop on sale every week, you probably don't need to, and there's probably plenty of other things you could be doing in your business to keep driving conversions without lowering your prices, without training your customers to think, wow, I'm going to wait for a sale. Because I've seen this, I've seen it myself. I had a, there was a business I used to buy a lot of clothes from, and until they got bought over by someone else, and the quality went horrible, but they were slightly pricey but worth it. But like every, it was like the last week of every month they would do a 25% off sale. So I only ever bought cuz I'm like, well, I know that sale's gonna come around again. And so the other 3 weeks of the month I was just like, well, I'm never gonna buy anything from them. And there's a lot of things where I say, well, people will never notice. This was like, I I was a big enough fan who liked stuff often enough that like I did notice and pay attention. So here's what they could have done to keep me if they hadn't sold to someone else and reduced the quality.

I feel like there's a big distinction in here. If you're a luxury brand, this is especially good for you because you can't really use sales on a luxury brand without degrading yourself. And if you're a, um, if your competitive advantage is not price but more like speed, speed, then this is also good for you. But you play with discounts too. I'm sorry, that came out better in my head than it did through my voice.

But I think there's something easy about when you're doing discount is you're like, okay, 20% off, which you're like, okay, I'm still making 80% of the money. But when you look at your profit margins, offering 20% off can be your whole profit margin in some businesses. How much of it, of your own profit, are you taking away? How quick realized doing Black Friday sales where I do 30% off, and I even gave my VIPs extra on top of that. That was my, like, especially on Etsy with all their fees, I ended up with no product margin. I was paying, I was just sending stuff out for free. So that, that's a mistake you make. You do tend to realize it very quickly.

Or number one, if you're gonna discount, know your numbers.

Yeah, but really think about how much of your profitability are you giving up, not how much of the overall price. So, we're saying you don't need more discounts. What do you need to do? What can you do? And I like, whenever you do any sort of promotion, because we're still going to say, do some sort of promotion, there are 3 different triggers that make up the BUS framework, which I stole from someone else, but I've kind of run with. You can use all of the parts of the BUS framework individually, but they work really well when you put together all 3. But you don't have to do that every time. Sometimes, like Black Friday, put all three together and you have a really good offer. But throughout the year, feel free to do one and test out different things work. So, what is the B.E.S.T. framework, you're probably asking? It stands for bonuses, urgency, and scarcity. So, how do you use them? Bonuses— these are something that adds some sort of value on top. Not taking money away. And for some people that, like, especially if you talk about like luxury brands or whatever, adding things on can often be more of a deal. For someone who already has money, who is willing to pay $250 for a t-shirt, they want more a lot of the time. Like, I don't really care that it costs this much, I make $10,000 an hour. It's, they want the bonuses. So you can add something on that adds to that value. So adding on like a free, a free smaller item. So like you saw the t-shirts, can you add on a matching, I'm trying to think, what would you do for clothes? Like some sort of matching accessory. I'm really keen to know, I'm not in the fashion world, but like if you make soap, can you do like the little, uh, trial sample size soaps?

If you're in the fashion world for women, you would add on usually a pair of earrings or a bracelet or some kind of accessory that goes with the item that they're buying.

After that.

Yeah. If you're doing consumable things, yeah, keep going.

Keep going. Yeah. Like the samples list. But, um, and sometimes people panic like, ooh, this is gonna cost me a lot of money. And like for something, like if you do like the soap example, sometimes your offcut can be your free sample size soap. Like what kind of stuff do you have lying around? But they don't have to be physical. Sometimes you can do a digital download on top. If, um, I sell I sell personalized stuff. I've done aprons in the past. I could have a recipe card that goes along with it that they download, like, or even like a little mini recipe book. I could do a set and like I could, in fact, making more money at the same time. I could do a set where you get like an adult apron and a kids apron. And the bonus for a limited time only is you get my free book of recipes that are good for like parents and kids to make together. I'm like, that is a nice offer. And I just ended up selling 2 aprons instead of 1, like I was originally going to. Um, so that kind of like checklist guide, like what kind of digital things can you make? There's for pretty much any business, there is some sort of digital thing you could add along.

Um, if you're okay being on video, this is an amazing spot for micro courses.

Yeah, totally. It depends like what you do and like If your product has different uses or like there's a little bit of training required to get the most out of it, how can you put together a guide or a video or something that really helps people? If you are in skincare, how can you help someone create a whole skincare routine? If you're in jewelry, can you help people like with the whole styling and does the, does the necklace match the earrings? Like all that kind of stuff. Like what kind of necklace goes with what kind of—

this neckline shirt or dress. Yes.

Yeah. How to not look like you're weirdo.

If you're in trending stuff, have you, uh, people on top of the trend, what's going right now so you don't look like last season. I am not that person.

How do you not make it look like you're pairing a Claire's Accessory necklace with a designer dress?

Like Paparazzi has killed that, or I say they kill at that.

So how can you add something on that increases the value? So instead, so like when you do a discount, it's like I'm getting $50 worth for $40. How can I give you $60 worth of stuff for $50? Like you're still giving someone $10 off, just in a different way. And you're increasing the value. People like getting free things, like they like to feel like they're getting something extra. So it's a great trigger. The next one is urgency. So getting people to take action now. I mean, there's ways to do this without feeling sleazy. I know a lot of people feel like, ooh, I'm creating some sort of artificial barrier to stuff, but there are ethical ways to do this and there are ways where it Genuinely, things do run out. Like if you're doing a sale for a weekend, you're not being disingenuous by saying the sale ends on Sunday. You're just letting people know. But including things like countdown timers, when you do stories on Instagram, you do a countdown timer, your emails include a countdown timer, on your website, you can have a countdown timer. Having these things in all those places encourages people to take action and take action now. I'm just like, oh, Melissa's gonna give me $10 off this, but she didn't say when it ends, so I got time. There's no dash.

You wanna remove that idea of I got time.

Yeah, it's the, okay, I need to do this now. I need to go grab my credit card, get to Melissa's website and order now.

My favorite example of that, that happened to me and it's not an e-com and I feel bad for that. It was, um, a Disney Fitness group. And I saw their ads during the week about this big challenge they're running with a fantastic prize and everything else. And that's really cool. Okay. Yeah. I want to join. I was like, okay, I'll think about this and whatnot. End of the week hits, it's Sunday. And they're like, this is it. It's your last chance. The challenge starts tomorrow. And I'm like, shit, give me my money.

And there's, there's also a lot of things.

You can totally put challenges with your products.

Yeah. But a lot of dates and things have that. Scarcity, urgency built in. If you're doing some sort of promo, not even a promo, just in general, if you are selling products that are good for Mother's Day, Father's Day, Christmas, New Year, whatever, even if you're, you're not saying—

there's a calendar cutoff.

Yeah. Even if you're not saying the sale ends on Sunday, if you're saying if you don't order this by Sunday, it will not arrive in time for Christmas. That is some real urgency and people are like, okay. I have to buy this or it's not gonna come. And I know none of this stuff ever works. Number one, the amount of orders I get the day after that's like, hey, sorry, mom, hope you get this by New Year's. Yeah, I read your gift notes, just if you're wondering if those things are private. They are absolutely not. I read them all. I print them out. But yeah, putting that urgency in there, whether it's like some sort of sale or discount or like the time the bonus runs out, or if it is that kind of natural urgency that's built in. Doing that and bringing it to the forefront, using things like countdown timers, not just the kind of, like they need to know, like it's the, like Father's Day has just been recently. It's the, if I don't know when your shipping deadline is, I might be like, well, I can, like I'm used to ordering from Amazon. I can order right up to the day before Father's Day. Probably not true if you're shopping with a smaller business. Like you need to let people know, oh, actually you need to charge this like a week before or whatever it is.

If it's customizable, if it's not sitting on our shelf ready to go.

Yeah. So making sure you have those—

We also don't tend to have shipping teams who are pulling orders as soon as they come in. Like if I have to pick the kid up from school, you might've missed today.

Yeah. So making sure you have deadlines and things in there. And even if you do have that kind of, this is just like a, It's like a smaller trigger, but if you— what should I say? If you'll probably know it's on Amazon, if you add something to your basket, I'll be like, get it tomorrow if you order within 1 hour and 15 minutes. Like, I have that instinct. Like, they're not offering me any money off it, then I just— I know I want it. I know I buy a lot of clothes from Next. I used to buy a bunch of stuff from there. They have at the top of their website, get it tomorrow, order by 11, which I don't know why they say 11, because normally it's like half past 10 and suddenly you try and add something and it won't come tomorrow. That's side to pie. Uh, but having things like that, if you, yeah, if you know that things ship by, like you, if you can get it sorted by a certain time, just having that on your website, like it's not a deal or a thing that'll help you in this one-off, just like a general everyday people are like, oh, I want this quickly. So I know I have to order by 3 o'clock because that's when Melissa leaves to the post office every day.

Yep.

Or, uh, the mailman comes to pick stuff up every day at 4, so as long as she has it by 3, she'll have it packed up and ready to go. So including things like that on your site. And the final one is scarcity. So making it where there's a certain amount of something. The offer won't last or it won't come back and actually mean it. If you do, like a bunch of businesses do this in a horrible way. It's like, I'm never gonna do this again. And then next week suddenly they do it. Or, um, yeah, this thing is only this price until midnight. And then the morning after, oh, well, I'm gonna expand it.

Back by popular demand. Like, oh, you didn't hit the sales you wanted, did you?

Yeah. Being really firm on this. And sometimes, like, sometimes it hurts to to be like, oh no, I was getting these sales and I killed it. But like, it helps train people over time if they know, oh, Melissa doesn't fuck around. Like, if she says this is gonna end, it's gonna end.

For once it's not me cursing, even though it's about me.

Uh, but having— you can have a limited edition product, like the— Melissa only sells this necklace one-off. Or she only sells it in red for Christmas.

Yep. Specialty color.

Specialty color. Yeah, you can do it in that, like it can be a product or it can just be a specific variation of the product is limited. Having things like the bonuses we talked about before, only the first 10 people get this, only the first 20 people get this. Yep. Those kind of like disappearing bonuses, you can do them scarcity by like the amount of people and you can also do it by time, kind of link them back to your agency. Like the, I don't know, maybe you do 2 bonuses and it's like one of them goes to everyone, but yeah, if you want the second bonus, you have to do it within the first 24 hours. Like the, we'll go back to the example, the recipe book goes to everyone, but if you also want the like bake-along video collection with Andrew, you have to order within the first 24 hours and that is counting down so that you can do where it's scarce by people are scarce. It's kind of urgency. It's kind of a little combinationy thing. Things that are like once they're gone, that's— yeah, anything where you can make it where there's, there is some sort of scarcestness. It's kind of, and this one, this one really works. It's like you can get a bit icky with it because it kind of, kind of goes into like a primal kind of instinct of the of like food and stuff being scarce. Like, you don't want to go a bit too extreme with it because then you start to, to get bad for your customers. But like saying, okay, only 10 people get this, only 20 people get this, like doing it will really work. So yeah, it's not just a sales trick, like it's something you can really use. But the kind of magic of all this is when you combine all 3. I do recommend trying them all, testing different things. But then going, okay, I know that this thing works and this thing works and this thing works. Now I'm gonna combine them into one. Exactly. So let's say you are selling a candle gift set and you say, okay, the bonus is I'm gonna give you a free wax melt with any set, but it lasts until Sunday and there's only 25 of these wax melts available. Suddenly you have, okay, I'm giving— Boom!

Bonus, urgency, scarcity.

Yeah, you've got bonus, your urgency, you've got your scarcity. That is like the ultimate offer kind of thing. You're like tapped into all three of those things. You have people who are really only interested in like the one. You have people who are interested in all three and it's like half to half. Like it ties into a lot of triggers for people and you really can do it. With anything. So like combining all three, so it really makes it exciting. And like in that example, there's no discount. We haven't given anyone any money off in there. Sure, you're giving away your wax melt, but I'm sure it like doesn't have to be full size, be like a sample or something. Like what, like it doesn't have to be this massive thing. You can, sure you can get that where it costs pennies, not dollars. Like you can probably make it where it's Make it good enough where it's someone actually wants it. Like sometimes they're like a really crappy free gift. It's like, I really don't care. Yeah.

That is like for a free gift to work. Some people will just be like, I get this thing for free and that's enough for them. But for a lot of people, it's like, I gotta actually want the thing that you're giving away for free.

Yeah. Where was I? I was in a clothes shop and I was like, you spend over $150, you'll get a free beach ball. I'm like, what the fuck am I gonna do with a beach ball?

I don't want a beach ball. Ulta does it all the time with the free makeup sample kit and all that. It's like, but I don't want anything that's in your kit. I don't care that it's free.

I think that is totally, uh, depends on the person. Like if I can—

And that's knowing your audience. Knowing your audience.

Yeah.

I'm not a typical Ulta customer.

Yeah. But there's like, there's ways to that. And I think the example, like the candle one, the wax melt, like your ideal customer like that, and like it probably doesn't cost you a ton to do. You might have a whole batch of stuff that is left over, or like there's, I'm gonna say like there's a slight problem with it. Not so much that it's bad, like you don't want to be giving people stuff that you should throw out, but sometimes it's like you're not entirely impressed with the smell. Like there's something about it, like it was supposed to smell—

or it smells great, but the design was bad, poor, or not just not what you wanted it to be.

Yeah. Or like you, like they were supposed to be mint scented and they were supposed to be green, but they accidentally put in the pink and you're like, pink isn't a mint smell. Like there's nothing wrong with those. You can throw those in. Like you end up with all sorts, like there's always really clever ways to do this. Like I think back to our client who had soap that turned out wrong, but she said, it kind of looks like brains. And she turned it into this whole Halloween offer thing that was genius.

Oh, it was fantastic. The zombie brain soap. Yes. Yeah.

And that all came about from an example, like it was a, another example from a mistake, like something went wrong, but turned, like turned it out.

It's like, it's only wrong because of how you were preconceived that you wanted it to turn out. Turn out. Just. Shift the, shift the perception.

Shift the perception.

I can't speak today.

And, and you can still charge full price. There's a whole, like, there's things I see with small businesses all the time where like, this thing is wrong for this. And I'm like, I would never have noticed that or never known that. It's like, you know that that's wrong. You know that you're like, there's a sense people outsource for the same time. It's like, oh, they haven't done it. Who? How I would do it, so I'm discounting them all 50% off. And it's like, okay, there's nothing wrong with that though. Like, it's still a good product. It's just not what you thought. But as long as your customer would love it and feel like it's not gonna fall apart when they touch it, I'm like, you totally can and should be charging full price for that. Like, you deserve that money. Like, there's, I dunno, there's a whole confidence and permission thing and Whole 17-episode arc we could go into all this stuff, but the decisions handmade business owners make. But yeah, getting over it, I was kind of on a tangent, but getting over that kind of, it's not right in your brain, it's okay. Like just getting creative with it and using that to create a bonus or for anything else.

I'm gonna tack on to that as well. The amount of times that I have created a jewelry prod from like, this is ugly, this is horrible, but I need to fill in the collection for the night, so it's going out anyway. And you know which one sells out? The ugly one that I thought was ugly but my customers fell in love with. You didn't take the proof.

What happened?

But it happened all the time. Don't make ugly stuff on purpose. Like it won't work that, but things that might not come out how you expected it to does not mean that your customers— your customers.

Yeah. I've had a few times where I've done like slightly more custom, like different colors and things I don't normally do with products. And people will ask for things and they'll come out and be like, this is really ugly. Like it came out really bad. I got embarrassed by it. But cuz people chose it and they kind of have a lot invested and it is what they wanted. They've always loved it and they're like, this is amazing and they should tell people that. Well, that's when, and they get more orders on it. It's like getting over your own kind of, in your brain, like, oh, this is like, this is—

you're not paying yourself for your product.

Yeah.

They are paying you. It's what they want.

But I put the same effort into the product. The product is good quality. Like there's nothing wrong with it. It still should be that and even slightly more than I would normally charge 'cause it's custom. Like if I told myself, oh, well this is ugly, so I'm not gonna charge full price. I'm gonna tell that person like, no, this isn't good, so I'm not gonna let you have it. Like I'd have missed out. So getting over your own kind of concept, like we're too close to our products, especially like me doing embroidery. There are times I'll go into shops and like start looking at the clothes and like turning it inside out. I'm sure people are watching like, what is he doing? Like, this is so badly done. You're going to wash this and this is all going to just pull out and stuff. But someone else will come up and buy it. Like, they don't know that. All right. So yeah, you're all— get too close to your own product. So, and before we just go off on a tangent, your challenge, like, bonus urgency scarcity. Your challenge for this week is to run a promotion instead of a discount. Try one or all three. Let us know how you get on in the Facebook group. The link to that will be in the show notes below. And if you need help promoting it, you can use our Flash Sale in a Snap guide. You might need to change a few things because it is discount-centric, but you can always change it. And if you don't know how, ChatGPT is your friend, or Claude, or Gemini, or whoever else you can Roping. And you can grab that by going to theproductgrowthlab.com/flash. So in summary, you don't need a discount, you need a good reason to buy. Uh, how do I do that? Promote your email automation. No, that's not it. That's ChatGPT telling me to do that.

This is all, it comes down to testing. We are the Product Growth Lab. We are all about testing. So Hopefully by this time, if you've been following us, you've run a couple of flash sales, so you have an idea what discounts do for your shop. Now try Bust and see what bonuses, urgency, scarcity, one of them, two of them, all three of them wrapped in one, see how they stack up against a discount. And also pay attention to even if you get a few less sales, what do your profits come out to be on these? Like, look a little bit deeper at your numbers. Maybe you don't make as many sales, but you made a whole lot more money doing a bus style promotion versus a discount. And at the same time, Andrew's gonna hit me for this one if he could reach me through the camera. Yeah, run both of them one month at, however often you run sales, alternate them. Do discounts, do bus, do discounts, do bus. See what works. Test your audience. What do they respond to?

If you're doing a big, big sale, things like Black Friday, do a discount and a bonus and urgency and scarcity, and you will stand out amongst the millions of everybody else. Yes. Yeah. And you can do it without, yeah, you can do it without hurting, like you need to be clever and we can discuss this. If you're a client or in a group. But there are clever ways to do this where you don't suddenly give away $80 worth of stuff when you're only charging $50, because it's very easy to get carried away.

Yes, yes, it is. You get this thing and this thing and this thing and this thing. It's all 50% off.

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