Comments on: Got Discount Proneness? http://blog.jimnovo.com/2009/05/15/got-discount-proneness/ Moving from a Low Accountability to a High Accountability Business Model Wed, 21 Jul 2010 19:26:16 -0400 http://wordpress.org/?v=2.8.4 hourly 1 By: Nick Taylor http://blog.jimnovo.com/2009/05/15/got-discount-proneness/comment-page-1/#comment-82872 Nick Taylor Sat, 12 Dec 2009 16:50:47 +0000 http://blog.jimnovo.com/?p=299#comment-82872 @ Michael Whitaker - You mentioned that the Gap is training you to go directly to their sales rack... and if nothing is on sale then you're not buying. I've got a few thoughts on this.. 1) These products are approaching the end of their life cycle, when they were new they started at higher price points where customers less price sensitive will buy. Customers who buy earlier on in the product lifecycle are also rewarded by larger selection of sizes/colors. My guess is that once The Gap has felt they've maximized their profits at the higher price point the product gets moved into the sale section. If they didn't offer it on sale they'd probably not sell all of their remaining inventory and instead take a loss on profit maximization. Those people who are willing to wait until products go on sale take the added risk that they product may or may not be available in the size/color that they want... so you'll see people take a larger instead of a medium, or a blue instead of a green.. it's not the perfect fit but the lower price point helps increase sales volume while also maximizing profits. In addition, based on seasonality you might be buying summer clothes when going into the fall season etc. So I guess my point is that waiting until products go on the sales rack will not work for everyone. 2) You can use the sales rack as a way to drive traffic into your store, people want to see what's on sale but that doesn't necessarily mean that they're only going to buy stuff that's on sale once they get there. Customers will see other newly introduced products and possibly be up sold into the higher margin products. I think as long as The Gap is focusing on offering their sales/discounts at the proper points in a life cycle (whether that's customer life cycle or product life cycle) then that's the most important thing at the end of the day. -Nick @ Michael Whitaker – You mentioned that the Gap is training you to go directly to their sales rack… and if nothing is on sale then you’re not buying. I’ve got a few thoughts on this..

1) These products are approaching the end of their life cycle, when they were new they started at higher price points where customers less price sensitive will buy. Customers who buy earlier on in the product lifecycle are also rewarded by larger selection of sizes/colors. My guess is that once The Gap has felt they’ve maximized their profits at the higher price point the product gets moved into the sale section. If they didn’t offer it on sale they’d probably not sell all of their remaining inventory and instead take a loss on profit maximization. Those people who are willing to wait until products go on sale take the added risk that they product may or may not be available in the size/color that they want… so you’ll see people take a larger instead of a medium, or a blue instead of a green.. it’s not the perfect fit but the lower price point helps increase sales volume while also maximizing profits.

In addition, based on seasonality you might be buying summer clothes when going into the fall season etc. So I guess my point is that waiting until products go on the sales rack will not work for everyone.

2) You can use the sales rack as a way to drive traffic into your store, people want to see what’s on sale but that doesn’t necessarily mean that they’re only going to buy stuff that’s on sale once they get there. Customers will see other newly introduced products and possibly be up sold into the higher margin products.

I think as long as The Gap is focusing on offering their sales/discounts at the proper points in a life cycle (whether that’s customer life cycle or product life cycle) then that’s the most important thing at the end of the day.

-Nick

]]> By: Lyn http://blog.jimnovo.com/2009/05/15/got-discount-proneness/comment-page-1/#comment-69823 Lyn Mon, 01 Jun 2009 00:31:19 +0000 http://blog.jimnovo.com/?p=299#comment-69823 Having come from a past life in FMCG's I have been through the discount/promo trail. Unless you are absolutely forced into offering discounts/promo incentives by the opposition - they are doing it so we have to - don't go there. It is the slippery road to ruin. Discounts should be offered infrequently otherwise the discount "becomes" the normal price and you have to keep offering lower incentives. Promo items are even worse as you keep on having to escalate to keep up with what the opposition is offering and then you end up with a warehouse of stuff you cannot reuse (except to new clients, try keeping track of that, who has got what and what metrics to keep track of) is branded with a product so you can't cross market to another segment. Then you have to try and sell it off, write it off or give it away. Having come from a past life in FMCG’s I have been through the discount/promo trail. Unless you are absolutely forced into offering discounts/promo incentives by the opposition – they are doing it so we have to – don’t go there. It is the slippery road to ruin. Discounts should be offered infrequently otherwise the discount “becomes” the normal price and you have to keep offering lower incentives. Promo items are even worse as you keep on having to escalate to keep up with what the opposition is offering and then you end up with a warehouse of stuff you cannot reuse (except to new clients, try keeping track of that, who has got what and what metrics to keep track of) is branded with a product so you can’t cross market to another segment. Then you have to try and sell it off, write it off or give it away.

]]> By: Maia Bittner http://blog.jimnovo.com/2009/05/15/got-discount-proneness/comment-page-1/#comment-69599 Maia Bittner Thu, 28 May 2009 22:23:03 +0000 http://blog.jimnovo.com/?p=299#comment-69599 Wow - super interesting. I never thought of this before, but that's a good point. Keep up the good thoughts Jim! Wow – super interesting. I never thought of this before, but that’s a good point.

Keep up the good thoughts Jim!

]]> By: axel g http://blog.jimnovo.com/2009/05/15/got-discount-proneness/comment-page-1/#comment-68923 axel g Wed, 20 May 2009 19:04:13 +0000 http://blog.jimnovo.com/?p=299#comment-68923 That's a classic! The business owner tries pleasing his customers and ends up in a trap +_+ Nice post Jim! That’s a classic!

The business owner tries pleasing his customers and ends up in a trap +_+

Nice post Jim!

]]> By: Jim Novo http://blog.jimnovo.com/2009/05/15/got-discount-proneness/comment-page-1/#comment-68573 Jim Novo Fri, 15 May 2009 20:47:36 +0000 http://blog.jimnovo.com/?p=299#comment-68573 Yes, and that's the issue with Discount Proneness - if every communication is discount-based, it erodes margins because "Engagement = Discounts". There are people doing successful cart recapture with a service-oriented message, and there are people maintaining Engagement without Discounts. Knowing when and how to act in order to maximize profits is what my part of the webinar is about! Yes, and that’s the issue with Discount Proneness – if every communication is discount-based, it erodes margins because “Engagement = Discounts”.

There are people doing successful cart recapture with a service-oriented message, and there are people maintaining Engagement without Discounts.

Knowing when and how to act in order to maximize profits is what my part of the webinar is about!

]]> By: Michael Whitaker http://blog.jimnovo.com/2009/05/15/got-discount-proneness/comment-page-1/#comment-68566 Michael Whitaker Fri, 15 May 2009 18:56:34 +0000 http://blog.jimnovo.com/?p=299#comment-68566 The Gap may not want to hear this, but I have been trained to go straight to the sales rack. If it ain't on sale I am not buying because I know that sooner or later everything will go on sale. Curse of knowledge - very hard if not impossible to unlearn something, in this case associating sales with the Gap. For the same reason, your conversion rate may suffer if you put a coupon code field on your checkout. The fact that it is there suggests that coupons are to be had and I will go hunting for one (and possibly abandon the sale if I don't find one). As far as shopping cart recapture programs are concerned I agree with you about the need to test. Sometimes all it takes is for a friendly customer service email to offer support and not necessarily a big coupon. The Gap may not want to hear this, but I have been trained to go straight to the sales rack. If it ain’t on sale I am not buying because I know that sooner or later everything will go on sale. Curse of knowledge – very hard if not impossible to unlearn something, in this case associating sales with the Gap.

For the same reason, your conversion rate may suffer if you put a coupon code field on your checkout. The fact that it is there suggests that coupons are to be had and I will go hunting for one (and possibly abandon the sale if I don’t find one).

As far as shopping cart recapture programs are concerned I agree with you about the need to test. Sometimes all it takes is for a friendly customer service email to offer support and not necessarily a big coupon.

]]> By: Jim Novo http://blog.jimnovo.com/2009/05/15/got-discount-proneness/comment-page-1/#comment-68565 Jim Novo Fri, 15 May 2009 18:50:40 +0000 http://blog.jimnovo.com/?p=299#comment-68565 Hmmm- I did not have a problem with it on IE - will have them look at it. Update: I'm told if you Click "Run System Check" button (Magnifying glass next to webcast title) they can assist; likely a transient problem with 400 already registered. And probably should name that button something else, I'd say! Hmmm- I did not have a problem with it on IE – will have them look at it.

Update: I’m told if you Click “Run System Check” button (Magnifying glass next to webcast title) they can assist; likely a transient problem with 400 already registered. And probably should name that button something else, I’d say!

]]> By: Alan Rimm-Kaufman http://blog.jimnovo.com/2009/05/15/got-discount-proneness/comment-page-1/#comment-68563 Alan Rimm-Kaufman Fri, 15 May 2009 18:39:25 +0000 http://blog.jimnovo.com/?p=299#comment-68563 hi jim -- tried to register for webinar and reg form crashes on submit http://register.webcastgroup.com/event/createAccount2.asp?wid=0870519094639 just a heads up alan <a href="http://www.rkgblog.com" rel="nofollow">rkgblog</a> hi jim –

tried to register for webinar and reg form crashes on submit

http://register.webcastgroup.com/event/createAccount2.asp?wid=0870519094639

just a heads up

alan
rkgblog

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