How do you sell products without discounting?
Not just ticky tacky mindless impulse buys either. I’m talking about legitimate products—premium brands with higher price tags.
Most brands in the world would love to know the answer. But the truth is that not all brands can actually accomplish it. The temptation of discounting to get sales is too high for most. But also, the need for cash flow is genuine.
Here we will talk about what it takes to actually accomplish it.
I think the question stemmed from this company's interest in selling one day. Right now is a great time to own a consumer goods brand. Companies are selling left and right. Pure Evita just sold, Blenders sunglasses just sold for 90 million bucks. Hello toothpaste just sold. If you’ve built a brand on customer enthusiasm rather than discounts, you’ll get a premium payday.
Many venture money is moving into these consumer good type products because they're built on a simple income in, expenses out model; not overvalued based on growth like WeWork or something like that. There is an authentic and simple system of money coming in and products being shipped out. Then again, you look at a company like Casper mattresses that's losing $180 per sale and somehow gets a crazy valuation. In any case, you can see clearly if the product is profitable or not. If not, you’ll be able to see why not and justify a decision to invest based on those real reasons, not speculation.
Not discounting needs to be a particular goal.
You need to stand firm on the idea that you’re not going to discount. Otherwise, once you dip your toe into the discount waters, you’ll get sucked into its effectiveness like a Star Wars tractor beam. That’s a race to the bottom, and only one brand wins because only one brand can have the lowest price. Be determined to not discount, and whatever you do, manage your expectations. You need to create different KPIs and slow down your need for conversions.
You need to be well funded.
The goal here is to build a brand, not conversions. That said, your paid media CPA will be not just higher, but much higher. Customer Journey will be longer. This is especially important to note if you’re just launching a brand with no customer data to target or build audiences off of. Not only are sales going to come in less frequently, but it's going to take a longer timeframe for them to actually convert. That slower conversion count is a real hurdle for most companies. Businesses need to sell through and generate cash flow. The pressure for revenue can be so overwhelming many companies fold under pressure and discount their prices. Don’t be in that position. Get enough money together that you can survive. It’s an investment, not a loss. Be patient.
Prospecting and Retargeting.
Even a 15% discount can make people feel like there is a reason to click through and see an offer in greater detail. Without that discount, what is the reason people would click through? I’m not even talking about buying right now. We’re just talking about click-throughs. This is the absolute top of the funnel. If you can’t get people to click through, you have no chance of a sale. So, if it's not a discount, what is it? It’s interesting. You need to create interest. Basically, you want people to say to themselves: “That’s interesting. Tell me more.” Then you rephrase this for your particular industry. If it’s a clothing brand, you want them saying: “That’s cool, show me more.” You get the idea. It’s about putting something in front of your target audience that they need to have because they identify with the message and think that getting closer to the brand will improve their lives or make them feel that way.
What we're really talking about here is brand story = Great Storytelling
We need people to pay more for a product, and that all comes down to why painting a picture of why they would do that. How do you create a great why that all comes down to the content you're producing? If you're not producing level ‘A’ content all the time, then it's just not going to make people feel like the product is a premium product.
THERE IS A REASON TIFFANYS IN ABOUT TO CHARGE 3X FOR A SILVER RING THAT OTHER CREDIBLE SOURCES. YOU KNOW IT’S A TIFFANYS RING.
If prospects for a consumer good brand offering a modest discount typically converts in the first 30 days, then perhaps a premium consumer good brand without discounts might convert in 120 days. You cannot show them the same imagery on social media, email, or ads throughout that timeframe. That may seem obvious, but most brands anticipate how much content they’ll need. Build a structure and system to create content. Interesting and beautiful content. All the time. Remember, you’re telling a story, and it needs to be interesting.
The way you communicate with people on day one of brand introduction and on day 30 should be very different (if you’re retargeting properly). What messaging you show this same prospect on day 100 needs to be even more different. You need to prepare appropriate communications for all these stages in the funnel. They all need to be different, have the same tone, and be interesting. Good luck.
As you go through the process of creating the content, the brand identity, including the tonality, needs to be consistent. You’re building a promise to your would-be customers. After they purchase your product, they are going to be different. Feel something. It’s called “cool” or “happiness.” That’s what you’re selling. Not consumer goods. Build that messaging.
Targeting Opportunities:
Something I forgot to mention is the targeting. You've got to niche down on your targeting and get it really tight. It's possible to get really specific with the type of people that you're advertising to. You may have a smaller audience size with your prospecting campaigns, which means they’ll be more expensive. But who cares if you're paying 80 cents a click instead of 25?!
LinkedIn is a great example. We could target HR managers in Florida, build an audience, then retarget to them on all platforms. Bada-bing! Remember, there is no interest-targeting in retargeting. You’re only sending traffic to people that have engaged with your brand. This is why you need to niche down your targeting when prospecting. If you don’t, all this long tail retargeting will be directed at broad audiences = wasted money.
Before this all starts, though, you need to understand who your “Hero” customers are. 30-year-old men that exercise 5 times a week, make $80,000 per year, and love micro-brewed beer. Start by finding your Hero.
What kind of content do you need?
You need a blog.
This is one key to long-form conversations with your prospects and customers. It's a way for you to cement your brand in their mind. This is where you can share all the amazing information that you have about how great your products are.
You need a podcast.
I think anyway. There is simply too much momentum on podcasts right now and an opportunity for connection for your brand to not have a podcast. Remember that some people don’t like reading a blog, but they’ll listen to a podcast all day long.
You need social media.
Duh. But it's an opportunity to stay in front of your prospects and customers every single day. I follow a lot of consumer good companies because I own a digital marketing agency and work with Direct To Consumer brands. Companies post every day, and most of the time, it's a simple product shot (which is lazy), but I laugh because ultimately, it’s just an ad for their products. You’re putting your product in followers' faces and talking about how great it is. The only thing missing is the word “AD” or “Sponsored” at the top. This needs to be happening every single day. I need you thinking of this as ‘free ad space,’ not social media posts. Especially while platforms offer social, organic reach.
You need email.
People electively signed up to receive your emails. That means they want to receive them. Do not think of email as invasive or potentially bothersome. Think of it as retargeting. No different than Google Ads or Facebook Ads retargeting. Email just so happens to be the most profitable thing you can possibly do for your businesses, especially if you’re not discounting.
If you have hundreds of thousands of emails, it can become costly, but for the most part, it is cost-effective. The most costly part of an email is content creation because you cannot show anyone the same email twice. That can happen with something like Facebook ads, but not with email. Where you save a few bucks on ad spend, you spend it on content. But the returns on email are much much higher than paid media, so the ROI of that medium is huge. Especially with extended customer journey time frames.
You need Display ads.
Cheap clicks and targeted placements are a great combination for premium brands that don’t discount. That is exactly what Display offers, but is it going to be a magic bullet for positive ROAS? No. It can showcase products, create interest, get click-throughs, and build audiences for your dynamic retargeting campaigns. And it's an important aspect of staying in front of prospects = top of mind. Top of mind means being closer to their credit card. It’s imperative to be in front of prospects with an extended customer journey timeframe.
Display can be image-based, and that means more creates. You can repurpose a lot of what you have made for other platforms and then place some text layovers on the images with tools like Bannerstack or Canva. Or you can hire ATTN Agency to handle it all for you.
You want Youtube, but don’t need it.
By now, you’re planning to have videos made for Facebook ads. Real video ads too, not just customer testimonials. So you probably already have video being produced. But YouTube is not like Facebook. It requires a unique type of video. It’s like comparing Instagram to TikTok. Totally different kind of content. If you have the capabilities for making the “kitchy” and funny video ads that YouTube requires, do it. If not, it's not the end of the world. Just know that you’re missing out on some of the cheapest traffic on the planet. Literally, YouTube offers infinite scale and penny views. No kidding, penny views are possible. And get them often.
This is because YouTube is difficult to get working correctly. The barrier to entry is money. That’s why views are so cheap. You can’t go halfway on your content production and expect YouTube to work. You have to go all out. That means spending real money to make something great. Most companies aren’t prepared to do that, so they aren’t on YouTube. Less competition in ad auctions = cheaper CPMs.
Campaigns that have video components perform better. Google has posted studies about this. Having video as an interruption advertisement at the top or middle of the funnel can be extremely effective. It also gives you a chance to show your brand's personality in video using Google Ads: the only place you can do it.
Optional: Do something unique.
There are many things you can do to make your brand stand out off the internet. It’s worth considering the investment if you’re not going to offer discounts. Handwritten letters can be sent to initiate checkout lists or Leads. Imagine showing interest in a company and then five days later getting a handwritten letter from the CEO. That would feel different and be very memorable. Maybe even create some Social Currency = word of mouth.
Now I’m not suggesting that your CEO handwrite these letters, but they could. The founders of Wufoo hand wrote Christmas cards to all their customers for a long time. Kevin Hale had a podcast where he talked all about it. Wufoo is an amazing company for info captures, by the way. Pretty sure they offer a free trial too.
There are companies that do it on demand. Scribeless.co & Handwrytten.com are a couple that will give you an idea of pricing.
This is just one idea. There are a ton of different options. Best Made Co. Makes catalogs that they make with beautiful images of their products in action. They even sell them! Imagine people like your brand so much that they pay for a book of pictures, which is essentially advertisements. That’s the power of a brand.
In Los Angeles, a glasses company that doesn’t discount called Garrett Leight, has a printed brand book that they give away with every purchase. It’s full of beautiful imagery and fun little stories about LA-based companies. The company doesn’t discount either. Just imagine buying a pair of premium sunglasses, and when they arrive in the mail, you also unexpectedly get this storybook as well. It’s awe-inspiring. It sits on your coffee table and is a topic of conversation for everyone who sees it—social Currency at its finest.
You can’t really justify this kind of expenditure if your AOV (average order value) is low. One of the best examples of doing something special for smaller AOV consumer goods brands comes from a company called Sweetwater. They go above and beyond without breaking the bank. You can find the story of what Sweetwater does here.
Lastly, having a retail presence would help.
As a digital marketing agency owner, naturally, I have been very anti retail in the past. Over time I’ve seen that it can be the lifeblood of cash flow for many businesses. Regardless of what is happening online, a company with a retail presence is going to continue to have sales and cash—lowering the “requirement” to convert DTC (direct-to-consumer). Hello toothpaste is a great example. Look at what was told to me by their founder when discussing Black Friday.
A perspective like this can only come from cash flow, confidence, and vision. It goes back to what I said at the beginning of the article: “You need to stand firm on the idea that you’re not going to discount.” It will guide your decision-making process like core values. Hello took a stance on the issue of discounting, and it influenced the way they grew, including having a retail presence and how to handle days like Black Friday.
What all this adds up to is having a true customer journey and understanding that the path from prospect to customer is abnormally long. 1 Day ATC (Add-To-Cart) campaigns that normally convert really well might not do so hot for a brand that has an anti discount position because there is no reason for someone to ACT NOW!!! They are more or less, just absorbing the brand. That’s the learning phase. You can sometimes skip that step with a discount, but stay patient and focused. If you manage expectations and KPIs well, you will achieve true Brant Lift. This means you’ll be top of mind and ultra recognizable. In time, you’ll convert and build an incredibly loyal following.
From a customers’ perspective, there's no point in rushing into a purchase. When they decide it's the right product to buy and they are ready to buy, they will. So how do you get people to decide yours is the right product to buy?
This happens over time. You need to pull them back in and make them love your brand. They “have to have it.” That means pulling them back in based on content, not price. And that content needs to be great. They need to identify with it. It needs to speak to them as a specific audience. It can’t be for “everyone.” Prospects need to see themselves looking cool or feeling better, wanting something because it is exclusive or at least reputable. This messaging is shown consistently through copywriting, images, and videos. Then displayed consistently by your digital marketing paid media agency.
Look at a company called Stamped in L.A. From what I can tell, they don't really do any advertising or performance marketing. The whole company was built from their blog. The “trendsetting” content they put up gave it a great name. The limited small-batch drops did sell out immediately as a result. The limited supply, coupled with high-quality branding, created demand. This clothing company was more than likely a side hustle for Chris Stamp in the beginning. But his strategy allowed him to grow exponentially over the years.
This is a lifestyle choice, not a functional one. People are deciding that they want to have your product for themselves and it doesn't matter what it costs.
That means staying in front of them, having something that looks really cool and desirable in your creatives and your copy, and communicating them in a very friendly and constant way through social media and email. And that's really all you can do if you're not willing to discount. You have got to stay top of mind, and all the information you provide top of mind has to be highly valued, highly engaging, truly interesting, and cool. At the end of the day, it has to be cool. Remember, only one brand can really be the lowest cost. Everything else is a story. All you're doing in this situation is trying to tell a premium story for a premium price.