Have you ever reduced any of your items on your e-Commerce website only to have the deal backfire just a few hours later?

If you've been in the eCommerce marketing industry for a while, you've definitely experienced this despite your best efforts. Discounts appear to be a no-brainer strategy to enhance sales or draw more customers to both online and physical establishments. However, astute marketers have realized that not every discount promotion will pay well. Some will simply fail. Why?

It's sometimes because we have unreasonable expectations. However, in most circumstances, we give reductions without considering the impact on the brand.

I've compiled a list of eight discounting blunders that most marketers who operate in the e-Commerce space make. But, before we delve into any of these blunders, let us first consider why we offer discounts in the first place.

The goal of providing a discount promotion

E-commerce companies provide discounts for the same reasons that brick-and-mortar stores do. Discounting is a quick and easy approach to attract clients, but it should not be the primary reason for giving discounts.

If you only consider discounts as a sales strategy, you are underestimating their power. Aside from increasing sales, well-planned discounts can add value to your brand.

When it comes to discounts, 'raising sales' should always take a back seat and your brand should drive the whole approach. The primary objective for offering discounts should be to create a pleasant brand experience. So, before you devise a discount plan, consider the following:

• How would the discount promotion affect my overall brand?

• Will it increase or decrease the value of my brand?

• Will this discount approach result in a favourable brand experience?

Once you've determined the appropriate brand experience for your discount promotions, consider how it will affect your profit margin.

Let's face it: as much as you want to boost brand loyalty and recognition by pricing, you don't want to jeopardise your profit margins. As a result, it is critical that you provide discounts that do not reduce your profit margins.

After that, let's look at the e-commerce discounting pitfalls you should always avoid:

A discount strategy that is not brand-consistent

Ayat covered this in her most recent blog, Staying on Brand with Discounts and Promotions, so I won't go into detail. In that essay, she opposes offering deals that have not been reviewed for brand consistency.

In other words, it is preferable not to run a promotion at all than to introduce one that would reduce the value of your brand. Your sales can still be increased, but what's the purpose if the brand suffers as a result?

I understand that aligning your discount strategy with your brand is difficult, but it certainly pays off in the long run.

Providing a Complicated Discount Promotion

Why make it harder for customers to understand a discount if you've already decided to provide one?

Complicated discount promotions always ruin a positive customer experience and are responsible for many e-commerce site conversions being lost.

Customers cannot be expected to grasp the discount campaign and make a purchasing choice at the same time.

Here are a few instances of complicated discount promotions:

• Buy more than 5 items from categories A, B, and C and receive a discount in category E.

• Purchase Product A at full price and receive a 40% discount on the second, a 30% discount on the third, and a 20% discount on the fourth.

• Buy any three of Product A, B, C, or D and receive a 10% discount.

• If a consumer purchases both Products B and D, there is no discount.

It takes a long time for the buyer to comprehend these discount criteria.

Products that are heavily discounted

Whether your e-commerce store is large or small, providing steep discounts to get rid of products is a costly error that will eat into your profit margin.

Macy's Inc. is a fantastic example of a large e-retailer that suffered as a result of giving large discounts without a clear strategy. It was recently reported that the largest department store operator in the United States is on the verge of closing 125 stores over the next three years.

• Will the deal attract the right customers?

• How will the steep discounts affect my brand?

• Do you have a strategy for demonstrating value after the discount expires?

• Can you have say over the message (and who sees it)?

• Have you considered pricing and value?

The main issue with heavy discounts is that they force you to sell more items to meet your monthly quotas.

In reality, deep discounts always say something about the worth of your goods. To be honest, you might be able to increase sales, but the steep reductions will diminish the value of your brand.

Customers prefer to buy reduced things, yet big reductions generate a number of issues, such as:

• Is the product's quality truly so good?

• Can I truly rely on the company that is selling it to me?

Humans are naturally suspicious when something appears to be too wonderful to be true. When we come upon a drastically reduced good, we get the same thrill.

Discounting without paying close attention to your margins

Discounting is a frequent marketing approach used to enhance sales and improve the bottom line. This may appear to make good financial sense, but the impact on your margins is not always favourable.

This is why I usually advise e-Commerce Managers to consider how discounts may affect their margins before lowering the price of a product. Looking at the relationship between selling price, margins, and volume is the best way to predict the impact of your discount strategy.

Discounting without paying close attention to your margins Discounting is a frequent marketing approach used to enhance sales and improve the bottom line. This may appear to make good financial sense, but the impact on your margins is not always favourable.

This is why I always advise e-Commerce Managers to consider how discounts will affect their margins before lowering the price of a product. Looking at the relationship between selling price, margins, and volume is the best way to predict the impact of your discount strategy. The first step would be to determine the current margin on the product that you are considering discounting. The margin is readily calculated by subtracting the cost of acquisition from the selling price.

For example, if your acquisition cost is $50 per unit and your selling price is $70, your margin would be $20. This basically implies that your profit margin is 29%.

Before evaluating the impact of the proposed discount, determine the volume of this product you are currently selling. This volume can then be multiplied by the margin per unit to determine the total monthly margin on this product.

Using the aforementioned example, if the monthly sales volume is 100, the total monthly margin - $20 divided by 100 - is $2000.

So, if you were to cut your pricing by 10%, your margin per unit would be lowered to $18 - we're still using the same scenario. The total monthly margin will be $1800 after the 10% reduction. So, in order to maintain the $2000 monthly profit you had before granting the discount, you'd need to boost your monthly sales volume to 112.

Unless you can guarantee 112 sales per month, it is more profitable for your company to not discount your unit price. This is not to say that e-commerce sites should not provide price reductions. Rather, it means that online stores should avoid discounting in a way that reduces their margins.

You are not targeting your offers.

This is most likely one of the worst discounts errors an e-commerce company can commit. Despite this, 57% of eCommerce companies make the same error of targeting the incorrect clientele.

Consider this: you buy a thing, then a few days later the same retailer gives you a 20% discount on the same goods.

How will you react to that?

You'd probably feel duped and insulted, wouldn't you? And you may never trust that brand again.

As a result, you should constantly target your discount offers to consumers based on their internet activity or personal information. If you're going to offer a discount to promote a specific product, make sure you don't send the promotion to people who have already purchased the same product - unless it's a different model.

Discounts should support the brand rather than harm it.

If you manage an e-commerce site, you will almost certainly need to discount at some time. As a result, it's critical to consider discounts as one of the highly effective strategies that may assist improve brand identification and loyalty. Discounts may be inefficient or even harmful to your business if applied wrong. They might even cost your firm money if they are significantly misapplied. This is why you should go to any length to avoid the aforementioned hazards.