As a luxury brand, you’ve worked hard to establish a reputation for quality and exclusivity. You want your customers to perceive your products as being worth the high price tag—after all, that’s what allows you to charge a premium.
If you’re like most business owners, however, you’re always looking for a way to grow your customer reach and revenue. So it’s only natural to wonder if using sales or discounts might be a good way to do that.
I mean, everyone loves a good deal, right?
The answer to this question is a bit complicated. On one hand, offering sales and discounts can help you entice new customers and boost revenue in the short term. On the other hand, luxury brands are built on the perception of exclusivity and high quality, and offering sales and discounts can diminish these perceptions.
So, what’s a luxury brand to do? Let’s take a closer look at the pros and cons of offering sales and discounts to see if it’s right for your business.
Pros of Offering Sales and Discounts as a Luxury Brand:
You’ll attract new customers.
If you’ve ever shopped at a luxury store, you know that they rarely (if ever) offer sales or discounts. So when they do have a sale, it’s a big deal. And people take notice. If you offer sales or discounts, you’ll attract new customers who might not have considered your brand before.
You can increase revenue in the short term.
If you’re strategic about it, offering sales and discounts can actually help you increase your revenue. For example, let’s say you offer a 20% discount on all full-priced items. To make up for the lower prices, customers might be inclined to spend more money—or buy more items—than they would have without the discount.
You can clear out old inventory.
If you have products that are past their prime or aren’t selling well, offering a sale or discount can help you clear them out to make room for new inventory. This can be a great way to free up some cash flow and keep your product selection fresh.
Cons of Offering Sales and Discounts as a Luxury Brand:
You could devalue your brand.
As a luxury brand, you’ve worked hard to create an aura of exclusivity and quality around your products. And rightfully so—these are the things that allow you to charge a premium. But if you offer sales and discounts too often, you risk devaluing your brand in the eyes of consumers. Suddenly, your products might not seem so luxurious anymore.
You could create price-sensitive customers.
Believe it or not, pricing is a psychological game. If you offer sales and discounts on a regular basis, you train your customers to expect—and wait for—these deals. As a result, they might be less likely to make a purchase at full price, even if they need or want the product right away.
You could undermine your profit margins.
If you’re not careful, offering sales and discounts can actually eat into your profit margins. For example, if you offer a 20% discount on all full-priced items, you’re essentially cutting your profits by 20%. And if you have to clear out old inventory, you might not make any money at all depending on how deeply you discount the items.
So, should you offer sales and discounts as a luxury brand? There’s no easy answer. It depends on your brand, your products, your goals, and a number of other factors. If you do decide to offer sales and discounts, just be sure to do it strategically—and sparingly—to avoid devaluing your brand or eating into your profits.
Here are some tips to make sales feel a little more special:
● Timing is everything. Offering a sale on Black Friday or Cyber Monday—or any other major shopping holiday, for that matter—isn’t likely to generate the same buzz as if you offer a sale at an unexpected time.
● Be exclusive. Offering a sale to everyone—regardless of whether they’re on your email list, follow you on social media, etc.—takes away the exclusivity factor. If you really want to create a buzz, offer the sale to a select group of people.
● Do it right. Discounts and sales should be done tastefully—a luxury brand doesn’t need to (and shouldn’t) offer huge markdowns or doorbusters. A small discount can go a long way. Have a plan!
● Reward loyalty. Sales are a great opportunity to reward your most loyal customers. Offer an exclusive discount to people who have made a purchase from you in the past, or give them early access to the sale.
So, what’s the verdict? Should luxury brands use sales or discounts?
Ultimately, only you can decide what’s right for your brand. But if you do decide to use sales or discounts as a marketing strategy, be sure to do it in a way that aligns with your luxury brand identity. With a little planning and creativity, you can avoid devaluing your brand—and actually increase revenue in the process.
