Jason S. Bradshaw explains how routine discounting can damage brand value and train customers to wait for sales. He gives numeric examples showing how different discount levels (10–35%) increase the number of units required to reach a fixed revenue target, then proposes three decision questions to test whether a promotion will truly deliver growth. He recommends adding a post-transaction nurture program to convert discount-driven purchasers into repeat, higher-LTV customers and closes with a CTA for a Business Breakthrough Coaching program.
Questions this video answers
100 units.
111 units (≈11% more than full-price volume).
125 units (25% more than full-price volume).
143 units (≈43% more than full-price volume).
154 units (54% more than full-price volume).
Chapters
Hi everyone, I'm Jason S. Bradshaw and this is Talking Points with Jason. Every fortnight I release my Talking Points with Jason newsletter and you can subscribe at Jason sbradshaw.com or on LinkedIn. And of course you can reach out to me on whatever platform you happen to be watching this live video on, or if you're watching on the replay, of course, replay. And be sure to send me a note with your key takeaway. If you have any questions during the live, be sure to throw them into the chat window because I'll see those come up and I will try to answer them while we are live. Now, today's topic or question is the discount drug hurting your business? I've had a number of conversations with business leaders throughout the year about their desire to stop discounting. And yet it seems like every week they come out with a new discount, a new offer to try and move the needle in their business to try and attract new customers. The reason behind discounting isn't necessarily bad in and of itself, but have you taken the time to step back, have and understand what the impact of that discounting is? So there are a lot of impacts from discounting every week. It impacts your brand value, customers perception of you. Also, when customers are most likely to buy, it's almost like you're training them to wait for a discount. But let's just let us look at the mechanics of discounting for one moment. Let's just say your regular priced item is $100. To sell $10,000 worth, you need to sell 100 units. If you offer a 10% discount, that reduces your average basket size down to 90 or the average units price down to $90. So to sell the same $10,000 worth of product, you need to sell one hundred and eleven units 11% more. You reduce your discount to 20%. So now the item is $80 instead of 100. You have to sell 125 or 25% more just to make the same $10,000. If your discount is 30%, you have to sell one hundred and forty three units to make $10,000. And if you go to 35%, you have to sell 54% more units. So 154 units just to make 10,000 or to break even. So before you think of discounting, I encourage you to answer these three questions. The first question Will the discount generate unit sales above the number required to break even from a revenue point of view? So if you want to discount 35% and sell more than $10,000 worth of product, let's just say that's your usual running rate, your usual weekly rate or usually daily rate. Will it sell 55% more units or more? Because in the example I gave, you had to sell 54% more just to sell $10,000 worth. So will it deliver more unit sales? That's question number one. Question number two, will the average basket size as a result of the increase as a result of the sale, will a customer put more than the sale item or more than one item in their basket above what your average customer happens to buy? Ideally, what you're looking for here is to maintain or increase your average basket margin. So let's just say your average customer sale generates you a 30% margin. Well, will the sale create a situation where the sale item plus an additional item still delivers that same overall margin mix? Because not every product in your business usually has the same margin. So ideally you want to keep at very least the margin mix the same, the overall margin the same. Ideally, you would like the average margin of the basket to increase. The third question is, will it create a net customer benefit, a net customer growth for you, as in will new customers enter your world or will customers that haven't done business with you in say 12 months come back into your world and make a purchase? Now, if you can get the trifecta, that being a guess in question one, will it generate more unit sales above the break even point? A yes. In question number two, will the overall basket margin be the same or higher than a non sales period and will it result in net new customer growth? If you can get that trifecta, then the discount promotion is a winner. It is absolutely going to deliver growth to your business. But those companies that achieve breakthrough success, the businesses that have breakthrough success do one additional step before they announce a sale and that is that they prepare a nurture program. Post the transaction, they think beyond the transaction so that they can deliver value to the customer post the purchase. The first value is to make sure that the customer understands how to use, how to benefit, how to get joy from their purchases from you. The second part of the nurture program is designed to expand the realm of possibility of what your customer can achieve, but by doing business with you to help them see themselves having more success, more joy, being more fulfilled by using your products and services. The ultimate goal of the nurture program is to take that original purchase during that discount promotion and turning that customer into a repeat customer so that there's repeat and referral business so that the average lifetime value of the customer increases. So those businesses that have breakthrough success just so you don't forget it. Don't just focus on the transaction, on the discounted sales event, but they focus on what they do with that customer post the transaction so they maximize the customer's love of the product, their affection towards the brand that they bought it from, and their likelihood to buy from you again and to refer your business to their friends and family. Now in another episode of Talking Points with Jason. I'm going to deep dive into what you can do instead of discounting to attract new customers, to attract lapsed customers back to your business. But remember, if you want to go deep into achieving breakthrough success in your business, then right now, the Business Breakthrough Coaching program is still open and accepting applications. It's completely free to apply. If you go to businessbreakthroughcoaching.net, you'll learn a little bit about the program. You'll be able to answer a really short questionnaire. It's about three minutes in length if you know your numbers. And from that, we'll schedule a call to make sure that I and my team can help you achieve breakthrough success in the year ahead. But right now, I encourage you to take the time to step back from your next promotion and ask those three critical questions to make sure that it really is going to deliver value growth to your business. I'm Jason Espretro. As always, feel free to comment below or to reach out in private message if you need any further assistance. Have a great week. Have a great week. Thanks, everyone.
