What DTC Brands Need to Know About Sales Events As a Marketing Strategy
Ask an old-school retailer how to drum up new business and chances are high they’ll suggest holding a sales event. Sales are a tried and tested retail tactic for brick and mortar stores, but they aren’t as commonplace among their online counterparts.
In fact, most DTC brands avoid them, says Retail Brew writer Halie LeSavage. “DTC brands say they’re already offering the most competitive price; discounts could undermine those claims.”
That doesn’t have to be the case. Done well, sales can be a versatile and powerful weapon in your DTC marketing department’s arsenal. The key is to understand what kind of sales you can run, what makes a successful event and what downsides exist that need to be carefully avoided.
What Sales Events Are Available to DTC eCommerce Brands?
Limited time discounts are very popular and for good reason. By only offering discounts for a limited time, you elicit a sense of urgency, explains Sidekick Digital Founder Will Blunt. “Urgency is a powerful psychological marketing tactic for eCommerce stores as it accelerates a customer’s purchase decision and reduces the chance that they will leave your site without buying.”
This type of sale can be run site-wide or on a certain selection of products. Alternatively, writes Blunt, you could create time-limited coupons and send them to customers at specific points during the customer journey, like when they sign up for your newsletter.
Another way to introduce urgency is by hosting limited edition sales events, says Alex Birkett, Senior Growth Marketing Manager at HubSpot. He points to shorts brand Chubbies as a master of this tactic. Every year they run an annual event called Julyber Monday where they sell limited edition products. They follow this up with a string of other limited edition products throughout the year.
Flash sales are another sales strategy, one that is far more common with online stores than brick-and-mortars. “A flash sale is a short-term discount or promotion on products offered by eCommerce stores, typically lasting for less than 24 hours,” explains Caroline Forsey, Editor at HubSpot’s Marketing Blog. “The goal of a flash sale is to entice online shoppers to impulse buy, increase brand awareness and customer loyalty, and compel shoppers to check out other non-sale products listed on the site.”
Sales events don’t have to see you cut prices. In fact, you could charge more than you’ve ever charged before. That’s what DTC health drinks brand Dirty Lemon did in 2019, reports Katie Deighton at The Drum. It created a Platinum VIP offer, which gave consumers unlimited cases of its drinks for $100 per month or $5000 for life.
How Can Sales Boost a Brand?
The obvious benefit of running a sale event is the additional revenue you can generate, writes Jordie Black at Prisync. That’s not the only benefit, however. Brands can also use sales to stand out in a crowded marketplace and gain some much-needed attention.
Sales can also be used to build relationships with existing customers, says the team at A Better Lemonade Stand. Exclusive sales for loyal customers (or employees and family members) is a great way to make them feel special. “If you can give a little something extra to your customers on top of the excellent-quality products you’ve provided them, do it! It’s a surefire way to enhance the overall customer experience. Customers appreciate being recognized for their efforts and loyalty.”
Running sales can increase your reputation as a store that offers consumers exceptional value as well as exceptional products, says The Good’s Jon MacDonald. “If you develop a reputation as not only being the place to find a great selection of tents and sleeping bags – but also the place where shoppers can find great prices – you’ve tapped into some word-of-mouth magic.”
Finally, some sales events can completely transform the perception of your brand. Take Supreme, for instance. What started as a New York-based streetwear brand has become one of the most coveted luxury labels in the world and a “highly sought after co-branding partner,” says the team at TalenAlexander. Supreme designs trend-forward luxury streetwear, but it is the exclusivity factor of their co-branded products that has truly set them apart.
Is There a Downside to Running Sales Events?
There’s a reason DTC eCommerce brands stay away from regular sales.
For one, deeply discounting your products can devalue your brand. The more you slash the price, the less it looks like you value your product. “Deep discounts cheapen a brand; strategic ones say ‘thanks’ to loyal customers and lower the barrier to consumers who are completely new to your brand,” he writes. “Longevity comes when the price is right.”
Sales don’t tend to attract loyal customers, either, writes tech journalist Karen McCandless. “If customers are choosing to shop with you based on price, they will wait until there is another sale –– or you send them another discount code –– before they shop with you again.”
That’s not what a loyal customer looks like, she continues. “They likely won’t read your emails, won’t show their love for your brand on social media, won’t tell their friends and family about you, and they won’t come back unless you have another really great sale.” Ultimately, they aren’t worth the money you’re paying to acquire them.
Sales can also undermine the loyalty of your current customer base. Customers may feel upset, even aggrieved, that they’ve paid the price in full only to have it slashed in half for someone else. That doesn’t seem very fair.
Secondly, customers may hold off shopping with you again in the hopes of landing another deal, says content consultant James Dillon. “This vicious cycle will dry up your revenue until your next sale boosts your numbers back up again. Suddenly, your discount periods start blending into each other as you find it harder and harder to convince customers to take action at original list prices.”
Technical problems can arise. Many people suddening trying to access your site simultaneously can lead to server crash. Big sales events also attract bots, which can buy up stock instantly before selling it for profit on third-party marketplaces. Anyone who tried to buy a PS5 when they first came out is aware of this issue, writes Ben Gilbert at Business Insider.
How to Run a Sale Successfully
So, how do you make the most of the advantages of running a sale without falling foul of some of the issues just discussed?
One way to avoid losing money on sales in both the short and long term is to keep your customer acquisition cost steady by increasing the average order value, write SellersFunding’s Chad Lio and Tim Jordan. Rather than discount specific products, bundle multiple products together and then put them on sale. “While it’s still the deal that your customers were looking for, your average order significantly increases allowing for more profitability.”
You’ll also want to make sure the back-end of your eCommerce store is optimized and able to handle surges in traffic.
James Gurd of Digital Juggler advises brands to be transparent when running sales to avoid souring customer relations. “The goal should be to provide transparency over stock availability to help customers decide how urgent the purchase is,” he says. “Where it falls down is with retailers that run on deliberately low stock levels and then the urgency message becomes effectively site-wide and impact is compromised.”
eCommerce consultant Ian Rhodes takes the concept of transparency one step further. He argues it’s important to be transparent on whether you run sales or not. If you do, explain to the consumer when and why you discount. If you don’t, explain why as well. “Whether you discount or not, present a level playing field. Take ownership of your pricing strategy and make it as clear as you can why you’ve taken the route you have.”
There’s nothing wrong with DTC eCommerce brands hosting sales events, but branding, technical infrastructure and customer experience should be considered beforehand.