I’ve always thought of discounting as something personal brands shouldn’t do.
Discounting is for life. Personal brands are for life.
Changes to either are irreversible.
It’s a chemical reaction. Yes, you can get the desired outcome. But now you’re stuck with that approach.
You can’t undo a chemical reaction.
Just look at J.C. Penny.
In Jan 2012, they hired a new CEO who had experience making Target hip and coordinating the launch of Apple’ Apple Stores.
I like to imagine him walking through the doors, chest out, overconfident from his experience helping a monopoly become more of a monopoly.
The plan for J.C. Penny was simple:
Go premium, make it clear that they have good prices always, and get rid of the discount loop they were stuck in, ripping off the massive discount strategy bandaid in favor of a more upscale approach.
Flash forward 5 minutes later: they lost about half a billion in the final quarter of the experiment and almost a full billy over the course of that year (source: New Yorker).
It would have been easy to do the market research to see what the fall out would be or modeling where sales to replace the fall out would (not) come.
“Easy to say in hindsight.”
But there were predictions this would happen (HBR link).
So it wasn’t a surprise.
At the time, the lesson learned was do market research before massively changing your pricing strategy. Or more simply, don’t take away discounts when your sales volume is completely dependent upon it.
A good summary of the (completely avoidable) mistake:
This drove old customers away without giving new ones a reason to come in. Offering pain and no gain is no way to remake a company.James Surowiecki, New Yorker
Seven years later and they’re still suffering. This year alone they are closing 18 full-line stores and 9 ancillary ones (source: J.C. Penny Press Release).
It’s “okay” to discount when you’re a personal brand selling a product you created that doesn’t have an overhead associated with discounting (like info products).
But just know that once you start, you can’t stop. It’s a decision with potentially permanent effects.