The ecommerce landscape has evolved dramatically over the past decade. Technological advancements, shifts in customer behaviour, and global events like the COVID-19 pandemic have accelerated online retail.
An estimated 24 million online stores worldwide compete for attention and spending. Platforms like Shopify and WooCommerce have simplified online retail, empowering entrepreneurs and established brands to establish their digital presence.
But a significant challenge bubbles underneath all this progress: competitive advantage through pricing strategies—a race to the bottom.
In this race, profit margins are sacrificed in favour of cutting prices to stay relevant and keep conversions high. Unfortunate side effects like eroding brand value and conditioning customers to expect discounts as the norm have been accepted at the price we pay to play.
For many ecommerce brands, this has become a dangerous balancing act: how to drive sales without compromising profitability or brand integrity.
But there are ways to leverage discounting, not as a desperate measure but as a strategic growth lever.
You can enhance customer satisfaction and loyalty by tailoring discounts to customer behaviours while safeguarding profit margins.
In this article, we’ll explore the challenges ecommerce retailers face with traditional discounting strategies, examine segmenting and targeting your audience effectively and discuss the impact of strategic discounting on brand perception and profitability.
Protecting Your Margin
The Problem
- The cost of goods is skyrocketing
- Prices are constantly under pressure due to intense market competition
- Brands feel compelled to sacrifice margins to maintain or grow market share through widespread discounting
Discounts can give an immediate boost to sales figures, but often don’t contribute to sustainable growth. They merely accelerate revenue to meet short-term goals.
The Solution
Implementing a real-time segmentation framework.
Their current state (whether focused, struggling, or abandoning), and most crucially, their intent, tells you when to step in and offer a discount or whether you can safely stay out of your customer’s way and allow them to purchase.
By segmenting your audience based on these stages, you can identify where customers stand in their buying journey, allowing you to make more appropriate offers.
This segmentation can be integrated into on-site discounting strategies and CRM platforms for managing discounts in behavioural campaigns like abandoned cart communications.
As an example, customers showing focused behaviour with a high intent to purchase may not need discounts to convert. In such cases, retailers can opt to hide or reduce discounts, preserving margins and focusing on opportunities for incremental sales.
By strategically understanding customer intent, ecommerce brands can steer clear of the race-to-the-bottom mindset prevalent in the market.
This approach ensures profitability while still meeting customer needs effectively.
Protecting Your Brand
The Problem
- Online retail competition intensifies
- Retailers increasingly rely on promotions
- Constant and widespread discounting
- Brands are trapped in a cycle of perpetual discounts to outdo previous campaigns
Over-reliance on discounts damages brand perception. Many customers now question the authenticity of pricing and categorise some brands as “discount retailers.”
This shift in customer perception threatens brand reputation, especially for retailers focused on quality and higher price points, threatening their long-term growth.
The Solution
Discounting based on intent to purchase.
The issue isn’t discounting itself but how we execute it. Generic and blanket discounting strategies need to be replaced with strategic discounting reserved for those who actually need it.
Pinpoint where customers are in their buying journey precisely—whether they’re engaged, hesitating, or at risk of abandoning their carts—and, crucially, their purchasing intent.
Use real-time behavioural data to offer discounts only to those showing low intent, are struggling, or highly likely to abandon. Strategically deploy discounts to these specific customer segments at the right moments.
This approach reduces discounting noise, protects brand perception, and responsibly uses discounts as a strategic tool for sustainable growth.
By demonstrating a nuanced understanding of customer preferences and needs, you can not only meet immediate sales goals but also build trust and foster loyalty.
Work Smarter, Not Harder
Whether you’re protecting margins or brand reputation, it’s clear ecommerce is stuck in a cycle of dysfunctional discounting.
Effective discounting isn’t just about slashing prices randomly; it’s about timing and relevance.
You need a game plan that identifies where customers are in their buying journey and whether they’re keen to buy or still window-shopping.
Instead, tap into intent data to figure out who needs that little nudge and when.
Segments for discounting
Here are a few segments you can implement to identify those that might need a helping nudge.
Basket Pauser
- Context: Abandon behaviour
- Summary: These customers have built up a basket and are now showing signs that they’re likely to leave and may return
- Objective: Maintain Intent. What can you do to encourage this behaviour, e.g., save items for later (with email), sign up for payday reminders, etc., or convince these customers that now is the right time to purchase?
Basket Abandoners
- Context: Abandon behaviour and unlikely to return
- Summary: These customers have built up a basket and are now showing signs that they’re likely to leave and not return
- Objective: Maintain Intent. This is likely one of the last chances you have to persuade these customers; think about appropriate messaging that can reduce their likelihood of exit. This is the perfect segment for you to highlight immediate value. It’s extra time, and it’s probably your last-ditch attempt to keep them and persuade them to convert.
Struggling Buyers
- Context: Struggle
- Summary: Customers likely on the checkout who are showing struggle behaviours
- Objective: Convert. They’re struggling and not checking out. Why? Are they checking discounts? Rather than push them through a checkout when you know this journey isn’t typical, how can you allow for the fact that they don’t seem ready to buy? Without cutting the checkout off, of course. Understanding and addressing this hesitancy is key to converting stalled checkouts into successful transactions.
Hesitant Buyers
- Context: Struggling, not in Committing
- Summary: Customers who showed they are ready to convert but are no longer on the checkout and who are showing struggling behaviours
- Objective: Convert. The challenge with this segment is understanding and addressing the underlying anxieties that hold them back. That can be a set of questions you’re not answering effectively enough, concerns about the product, price, and trust in the brand. How can you influence their experience to remove any anxieties causing hesitation and promote motivating factors?
Last Chancers
- Context: Abandon, low expected return
- Summary: Customers who showed signs they wanted to convert but are now abandoning the journey and are unlikely to return
- Objective: Convert. These customers have demonstrated high levels of intent but are unlikely to return and are predicted to exit soon. This is likely one of the last chances you have to persuade these customers; think about appropriate messaging that can be used to reduce their likelihood of exiting. This is the perfect segment for you to highlight immediate value. It’s extra time and probably your last-ditch attempt to keep them and persuade them to convert.
Segments to avoid discounting
Here are some segments that might not need a discount, but may need other nudges instead.
Unengaged Browsers
- Context: Struggle Behaviour with active events in Browsing (min. 10 events)
- Summary: These customers are starting to interact with the website, but they’re not progressing from browsing and actively engaging in product discovery (yet). Unengaged Browsers are characterised by their lack of interaction beyond basic page views.
- Objective: Engaging this segment means understanding why they’re hesitating, piquing interest and encouraging a deeper exploration of your site. Inspire these customers with categories/products to help progress them in their journey. They interact with the website but haven’t moved into a Refining Buying Stage.
Basket Convincers
- Context: On a PDP with a high affinity for the current product but has not yet added to the basket
- Summary: These customers are on a PDP, with a strong affinity for the product they’re looking at and high Add to Basket activity, but they have not yet added any items to the basket
- Objective: Build Intent. How can these customers be convinced to Add to Basket? Consider product-specific anxieties and motivators that can be used to influence them. They need just the right nudge to transition from interest to action. The challenge lies in identifying and addressing the factors that can convert this hesitation into decisive action.
Struggling Evaluators
- Context: Customers who haven’t added a product to the basket, have viewed multiple PDPs and haven’t built an affinity for any products
- Summary: Broad Evaluators are the *tire-kickers*. They are shoppers immersed in the evaluation stage, showing an interest in what your brand offers but without any clear direction or behaviour towards purchase.
- Objective: Build Intent. The objective is to guide deeper engagement with your brand first and then your products, not the other way around. They need help finding the right product. They need ease of comparison but also content to help them understand what product is right for their needs.
Product Persuaders
- Context: Showing struggle behaviours, haven’t added any products to cart, have built product affinity/affinities but are losing momentum
- Summary: Customers who have built a product affinity but have not added any items to the basket and whose journey is showing signs of slowing down / heading in the wrong direction
- Objective: Build Intent. Their behaviour suggests a moment of hesitation or reconsideration. They have potential interest in specific products or categories but also need further persuasion or reassurance. How can you help these customers get back to a product and persuade them to actually add to basket?
Focused Shoppers
- Context: Positive behaviours
- Summary: These shoppers are on the cusp of conversion, are progressing nicely and are making their final decision(s) before moving to checkout
- Objective: Maintain Intent. Keep these customers on track (probably just leave them alone or use subtle enhancements to the journey), and if needed, help move them into checkout. Make things more accessible, and gently persuade them over the finish line.
Ready Returners
- Context: Landed back on site (at least 2nd session) and have a high likelihood of committing
- Summary: Landing page customers who have returned to the site and, after showing high intent to purchase, are likely back to purchase again.
- Objective: Maintain Intent. Their behaviour is a testament to their previous unresolved actions. Having already shown high levels of engagement, the challenge now lies in nudging them over the final hurdle to complete their purchase. Try to understand why this behaviour exists. How can you get these customers back into their product purchase journey without distracting them when they return?
Embracing Change for Sustainable Growth
You don’t have to get trapped in that discounting death spiral - it’s possible to use discounting as a strategic tool.
Understanding customer intent allows you to be hyper-targeted with your discounting, protecting your margin and elevating your brand reputation.
Dig deeper into our intent-based segmentation framework here, or get into some execution strategies for making discounting work harder.
Here’s to shaping the future of discounting—one smart discount at a time.
