Meet the magic number proven to maximise profits and protect brand equity.
Black Friday/Cyber Monday underscored a critical balancing act for retailers: how to create compelling offers that entice shoppers while safeguarding profit margins and brand reputation.
- According to global Shopify data, discounts in the 20-29% range were the sweet spot, striking the right balance between incentivising purchases and preserving financial health.
- On the other hand, discounts exceeding 30% tended to result in diminishing returns, eating into profits without delivering proportional sales growth.
As we prepare for Boxing Day and January sales, astute brands will note a growing consumer preference for personalised promotions and value-driven messaging over aggressive markdowns.
Why No One Wins a Race to the Bottom
Heavy reliance on discounts fosters a deal-driven customer base who delay purchases until sales periods. Over time, this hurts cash flow and makes consistent revenue growth harder to achieve. For instance, customers who wait for 40% off sales may ignore regular 10%-20% offers, diminishing the effectiveness of smaller campaigns.
In contrast, a promotions strategy built around data-driven personalisation enables retailers to tailor offers that meet customers’ needs without the unnecessary margin erosion. Strategic promotions and messaging that emphasise quality, rather than price, are key to maintaining profitability and customer trust.
Recommendations for End-Of-Season-Sales
To continue to maximise profits in the New Year, retailers should pair the recommended 20-29% discount range with tactics that encourage higher AOV and focus on adding value.
The right strategy for your business might include the following:
- Tiered discounts (e.g. spend $100, save 20%)
- Exclusive product bundles
- Early access to deals for repeat customers
- Loyalty rewards
- Free shipping thresholds
Conclusion: Building Smarter Strategies for Sustainable Growth
The 2024 BFCM season reinforced the importance of thoughtful discounting, with retailers who embraced moderate offers and strategic value-adds outperforming those that relied on heavy markdowns.
As the New Year sales season approaches, the lessons learned from BFCM provide a roadmap for success. By prioritising meaningful, tailored offers and focusing on long-term brand equity, businesses can drive sales growth while building a loyal customer base.
Remember – the key to winning in retail isn’t cutting prices the deepest. It’s delivering value in ways that resonate with your audience.
For help realigning your promotions strategy with your long-term business goals, talk to your strategist or email us at hello@ph.digital.