Why Discounting Can Help Boost Customer Loyalty

– The author believes that tracking and optimizing the Customer Acquisition Cost (CAC) to Lifetime Value (LTV) ratio is pointless and cannot be controlled.
– Discounts and promotions are necessary to entice customers to make repeat purchases, as most people will not come back to shop without a discount.
– The author suggests running private sales for customers within the 90-day period of their first purchase, rather than waiting for general sales periods, in order to increase sales and maintain brand equity.Implement personalized discounts for loyal customers within the 90-day time period of their first purchase to increase the likelihood of repeat purchases.CAC to LTV has a loyal following. I think it’s stupid. I also think it should be gamed. (Even if assuming it’s CAC to 90-day LTV). Here’s why: Ask yourself, have you ever received a product that didn’t live up to expectations, didn’t get the checkmark in the “worth it” category, received an amazing email, and decided, “Hell, why not? I like shitty things. Let me buy another one and see if they do better.” The answer is always “No.” So, for all this talk about people tracking and looking for high LTV, you can’t control it. To think you can is absolutely crazy. Purchases are a combination of timing, need, and perceived value. The only thing that can beat need and timing is a massive discount paired with curiosity. You’re not the person. You don’t know why they purchased the product. You don’t know how or why the product lived up to the reason they purchased. You don’t know how often they use the product, and you don’t know if they need more of your products. A majority of people will not come back to shop at your store without a discount. So what do we do? The current method is to discount and chase people with discounts to lure them into making another purchase. This is all but admitting that the perceived value for those that didn’t purchase again, the vast majority in most cases, didn’t live up to expectations. How do we know this? For a lot of goods that aren’t necessary items, sales spike typically only around sales times where the reduction in price hits a justifiable splurge to stock up. People buy ski jackets in spring when the weather has changed if they can save 60%. There is no need, but there will be, and they can’t justify the price during the season. For the vast majority of brands, they would be better off running private Black Friday Sales to purchasers within the 90-day time period of the first sale rather than making everyone wait for a sales period. Will you reduce your brand equity? Not likely, as it will all be behind closed doors, surprise, and delight. Will word spread? Possibly, but you can cancel it at any time. Will you target some people that would have come back and purchased anyway? Maybe, but it’s rare that a brand isn’t running at least one promotion a month, so there’s no real way to tell. You’ll also tend to sell more goods if you track sales patterns that you would make up the difference of people not coming back to purchase. So you could flirt with discounts at varying levels and do global sales for people on products, or you could personalize the discount only to people in the prime time period for being loyal customers.To me the only thing that matters is product in hand the first time, it ups your chances across the entire customer journey. Let the customer decide the value and work with them to overcome those obstacles. Have you tried this? Let me know in the comments. #ecommerce #marketing #strategyhttps://www.linkedin.com/in/jivanco

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