3 Tips for Holding a Clearance Sale Without Devaluing Your Brand
Brand equity can drive sales and attract loyal customers, but even the most established brands erode when those reputations aren’t carefully maintained.
Brands need to stand for something — sustainability, creativity, luxury — to carry value. But when a company practices aggressive discounting without a strategy to inform those sales strategies, all that brand will stand for is cheap prices.
Still, most brands turn to clearance sales to turn over slow-moving inventory. These clearance sales may get products out of warehouses, but when run excessively they can jeopardize a brand’s image.
Consider these three ways to sell your overstocked products without cheapening your brand.
Use Customer Segmentation to Offer the Right Sales
Not all consumers have to know that you are itching to clear out inventory. If you broadcast to every consumer on Facebook or visitor to your site that everything is 70% off, your brand might come off as desperate for sales. Avoid this by targeting specific people who want to see your sales.
“Showcasing a brand’s desire to draw in a specific audience doesn’t come across as desperate — it makes the brand’s target audience feel seen,” says PR Consultant Jeff Barrett. If you have an excess of inventory in children’s clothes, for example, consider only sending promotions to parents who have made similar purchases in the past.
How you segment depends on your goals for the promotion. In some cases, brands want to attract new customers. Other times, brands only want to target existing customers. If you are targeting existing customers, business coach Catherine Langman suggests separating your list into customers who haven’t bought for quite some time and your most valuable, regular shoppers. Based on the different types of customers, you can adjust your messaging to engage each of those groups.
Carolyn Nye, Director of the Digital Interactive Group for Acxiom, suggests segmenting your customers down into even more specific groupings. This can include demographic, behavioral (life stage, shopping cart behavior, past purchases, etc.), geographic, or lifestyle traits. The more you can understand your customers, their behaviors, and preferences, the more you can offer sales to the right type of customer. This allows you to offer discounts without cashing in any brand equity in the process.
Not everybody needs to know when you are running sales. Make sure the people who do know will be delighted by the offers.
Reserve Clearance Sale Items for Loyal Customers
Instead of segmenting an email list based on consumer characteristics, you can choose to only offer clearance promotions to loyal customers.
Francesca Nicasio at Vend notes how Starbucks has gone with this approach. The company has been known to offer 20% off select items only to their loyalty rewards members. In cases like these, sales can be positioned as a privilege for those who are part of a brand’s community. Those customers will welcome that sales message and see it as a positive, not as a sign that the company needs to move old inventory.
Offering promotions as part of a rewards program can “make discounting valuable instead of deadly,” Kirsten Burkard at Smile.io says. By “deadly,” she’s referring to the fact that the more a brand offers discounts, the more conditioned shoppers are to buy at discount prices.
Industry analysts say this has become a major problem at Victoria’s Secret, Lisa Fu at Markets Insider reported in May 2018. “The MATH doesn’t add up,” one analyst told Fu. “VS/PINK appear desperate by giving away products (promos) to keep sales afloat.”
That same year, Victoria’s Secret introduced its PINK Loyalty Program. John Larson, Customer Loyalty Consultant at Retail Drive, writes that the program appears to focus mostly on promotions and giveaways, though. “From my point of view, this represents a missed opportunity,” he writes.
“Companies need to understand that a properly conceived loyalty program represents an excellent way for them to tailor their marketing messages to the specific needs of their customers. If you believe in the concept of market segment, then a well-designed loyalty program will allow you to address the individual needs of your customers in each of your key segments in a more targeted and direct fashion.”
When customers or even customer segments begin to see discounted prices as the norm rather than the exception, then the brand ceases to be exceptional.
Be Selective When You Offer Sales
It’s tempting to offer big clearance sales when other brands all seem to be participating in Cyber Monday, Amazon Prime Day, Click Frenzy in Australia, or Singles’ Day in China.
While annual events like these might be helpful in clearing out extra stock, it’s not always wise to participate.
Julie Mathers, CEO and Founder of Flora & Fauna, says her brand is picky about when to offer sales. Mathers recognizes that too much discounting can eat into her company’s margins and take away from what her brand stands for.
“As a brand we focus on ethical retailing and exceptional customer experience,” she tells Which-50. “That’s what we are known for, not discounting, and we are still growing 400 percent year-on-year. If you discount too much your brand changes. The huge sales peak is great but it can’t be at the expense of ongoing margin or regular sales.”
It’s equally important to consider where someone is in their buying journey when they receive a sales promotion message. eCommerce Strategist Nicole Blanckenberg notes how one study found that 54% of shoppers will purchase products in abandoned shopping carts if they are offered deals on those products.
This is different than a clearance sale, but the point still holds true — different promotions work at different times in a buyer’s journey. Your brand might have to wait for a strategic time to sell excess items to protect the brand rather than sales numbers.
Understanding Your Discount Strategy
Excess inventory is money sitting on shelves, waiting to be collected. It’s always tempting to run a sale just to move that inventory. But don’t mortgage your brand just to ship a few more orders. Be selective of whom you offer promotions to, what your message is to them, and when to offer those discounts.
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