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This article about deep discounting will surprise you. Here’s the story:
Price elasticity states that as price goes down demand goes up.
And this is why discounts improve conversions. To a point.
A full-price item discounted by 20% should generate a 20% lift in unit sales. At least that’s the expectation.
Increase discount by another 20% (on top of the original 20%) and expect to see a corresponding ~20% lift.
But this logic doesn’t continue for deep discounting.
Why? Because buyer psychology starts shifting.
First, let’s understand what’s going on:
Consumers are used to seeing a 20% discount.
We’re not used to seeing 80% discounts. So when we see those some of us start to wonder,
“Wait, why am I getting this insane discount, what don’t I know?”
We start considering scenarios:
- Is this item about to be phased out?
- Is there a defect with the item I’m not aware of?
- Is this company about to shut down? Inventory liquidation? If so, will I be able to make a return?
As you can see, a lot of chatter happens in the mind of the shopper.
So, what is a marketer to do?
The solution is to add a message right next to the incredible discount with this phrasing: “why the heck is this item discounted [x]%??”
Here [x] is dynamic and reflects the actual discount being offered.
On click, show a popup and tell your story.
Here is an example:
Running retail stores is expensive. There are staff costs. Rent. Inventory costs. With multiple locations, those costs add up.
By eliminating those you end up saving.
But here’s the thing, only 7% of people in the US know about us.
Instead of spending more on advertising, our strategy is to pass even more savings onto you. Why? Our hope (fingers crossed) is you’ll tell your 5 closest friends about us. Think of this as a bribe 🙂
But deep discounting is just one strategy
If you have a product that’s deep discounted you definitely want to build a story around it. But, you can’t just rely on deep discounting. Sugar is fun but we can’t have that as our only source of energy.
To get the full conversion rate impact your sales pitch needs to cover the other things shoppers are looking for.
Beyond deep discounting what else do shoppers care about?
Here’s the reality, we’re living in a world of infinite choice. Shoppers are drawing in options:
I read somewhere that the average person sees around 5,000 ads in a day. These estimates can’t really be verified but I know consumers see a lot of ads and how many ads they see in 2022 is way more than what they saw in 2002. That’s for sure.
To navigate this noise our brains have developed clever shortcuts. There are 1,000s of such mental shortcuts we use to dodge the marketing pitches coming our way. In the last 13 years, after running 100s of experiments for 100s of Direct-to-Consumer (DTC) eCommerce stores we’ve identified 9 key elements of buyer psychology.
We’ve also developed a conversion copywriting process to influence these 9 buyer psychology elements. See, when the consumer zigs, the marketer must zag. Deep discounting is part of too good to be true but there are 8 more conversion tacts you need to master.
Here is the full list:
- People are skeptical of “too good to be true”
- They find expertise sexy
- They root for people who beat the odds
- They are fascinated by surprising details
- They are visual animals
- They need motivation to break habits
- They love personalized experiences
- They like knowing they’ve stumbled onto something rare
- We must resolve their negative thoughts
Here is the article you need to read: Conversion Copywriting: Strategies That Will Make You $$$
We hope you liked this article about deep discounting. You’re bound to also love these idea gems:
About Frictionless Commerce
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