When retailers hold a big sale, our first instinct is usually to jump on the deal before it’s gone. We are more compelled to buy things on sale than the full-price. The obvious reason is that we save money, but what else is motivating us?
In this whiteboard session, Chris breaks down why discounting actually doesn’t work, and what you should do instead to trigger sales.
Why You Should Never Discount
The number one reason why you should never get discount to get sales is to avoid setting expectations for your customers. Chris explains that by discounting, you’re inadvertently establishing a pattern of behavior in customers.
Think about Fourth of July, Black Friday, and Christmas sales. At this point, we’re conditioned to expect the best possible prices when these holidays come around. Everyone expects a good discount, and will hold onto their money if they don’t receive it.
Why People Buy at a Discount
When customers see that prices have been reduced, there’s an order of events that take place to lead them to buy. The very first thing they do is anchor the price. They compare the discounted price to the original to determine whether or not it’s a good deal.
Then, the timing kicks in. If it’s a holiday sale, for example, there’s only a limited amount of time for them to get the discount. “FOMO”—or the Fear of Missing Out—starts to kick in here.