Many DTC brands in e-commerce make one of two mistakes when dealing with discounts.

Mistake #1: discounts are too high and too frequent

The first mistake is giving discounts that are too high and too frequent. These merchants distribute vouchers to customers who would have purchased even without them. A default 20% discount on every promotion harms margins over the long term and creates dependence on discount campaigns. Customers are conditioned to wait for the next voucher, which ruins your contribution margin and distorts the evaluation of all marketing channels.

Mistake #2: no discounts at all

The second mistake is avoiding discounts completely. This strategy works only if your products are uniquely good and barely replaceable. It may work for exceptional companies like Apple, but not for the vast majority of brands. By avoiding discounts, you let good customers churn without a fight, which means you lose not only revenue but especially contribution margin. You already acquired these customers at high cost in the past, and every additional repeat purchase would have improved your margins.

The solution? Timing is decisive.

Use a time-based discount ladder that follows the customer lifecycle. Recently acquired customers who are active and satisfied do not need discounts, or at least not high discounts. More than anything, they need opportunities to discover additional products. The discount should be increased only when inactivity threatens. One possible ladder could look like this:

  • Less than 60 days after the last purchase: no discount. The customer is shown products at full price.

  • 60 days after the last purchase: 10% voucher.

  • 90 days after the last purchase: 15% voucher.

  • 120 days after the last purchase: 20% voucher.

If the customer buys during the sequence, the cycle starts over. This approach optimizes discount usage and reduces the ratio of marketing costs to revenue.

Test different time periods and voucher amounts to find your optimum. In our article on the right timing for repeat-purchase campaigns, we help you derive the ideal moment for your campaigns.

And the best part? Automate your discount ladder!

Automate your discount ladder with email tools such as Klaviyo and use our PostPal app to send postcard campaigns, so you can also reach customers who do not receive emails, which is the absolute majority of your customers.

Interested? Then sign up, and our team of e-commerce experts will help you set up your first campaign.