Strategic Discounting

“Discount” can feel like a dirty word.

No one wants to invoke the “D” word. You want to sell full-price, full-margin products, and take it all to the bank.

But the reality is, 99% of brands need to discount. You need promos that spark excitement — and the easiest way to do that is with a discount.

You’ll have some luxury brands who, as a matter of principle, never discount. But unless you’re running Louis Vuitton or Dior, it’s a fact of life.

There are always exceptions, but generally, trying to be a "premium" brand and avoiding discounting for those reasons isn’t always the best approach.

Until you have the brand equity to back it up, you’re always going to lose to a brand that does discount.

The key is to use discounts strategically.

It’s like anything, really. We talked about it a while back in regards to LTV. You need to have a reason for what you do.

If you’re offering discounts because that’s what you think you’re supposed to do, you’re losing.

If you’re offering discounts deliberately, with a clear goal in mind, discount codes and flash sales become a powerful revenue tool.

The “Dangers” Of Discounting

The anti-discounting advice typically revolves around one of the following:

“Discount too much and you’ll kill your margins.”

“Discount too often and you’ll train customers to never pay full price.”

“Discount at all and you’ll cheapen your brand.”

There’s truth to some of that. These are real risks — and worth keeping in mind.

If you’re running constant blanket sales, yeah, you’ll erode brand equity and profit at the same time. If every “limited-time offer” turns into a monthly event, you’ll condition your audience to wait for the next one.

But we can be guilty of taking this as a blanket rule that you should never discount. (I’ve definitely been in this camp at times too).

Discounting isn’t inherently bad — lazy discounting is. The danger isn’t the tactic itself; it’s the lack of intent behind it.

When you don’t know why you’re running a promo, you lose control of how it shapes your customers’ behavior.

Handled right, discounts aren’t a threat to your brand. They’re a lever. A tool for steering behavior, accelerating data collection, and managing cash flow.

You want to shift from fear-based discounting (“We need a sale to hit numbers”) to strategic discounting, where every offer serves a purpose.

5 Ways to Use Discounts Strategically (Not Randomly)

So let’s talk about what strategic discounting actually looks like.

Discount promos can steer your business in the right direction. The key, though, is you need a goal — not just cutting prices for the sake of it.

1. Acquisition

Discounts are often your best-performing acquisition tool — when they’re used with purpose.

These are your first-purchase offer (10–20% off or free shipping), which often increases the chance of converting a new customer.

Once they’re in the door, you can start building towards repeat purchases at higher margins.

The key is intent. You’re not discounting to “boost sales.” You’re investing in a relationship.

2. Retention & LTV

Discounts aren’t only useful for attracting new customers. They’re also a strong tool for loyalty & retention.

A discount is a great way to reward loyalty, and drive it up to another level.

• Milestone rewards: give loyal shoppers a perk when they hit spending or purchase milestones.

• Anniversary or birthday promos: small gestures that feel thoughtful, not pushy.

• VIP offers: exclusive discounts for members of your “VIP” segments; top-spenders, app users, community members.

Ignoring this is a mistake too many brands make — especially around Black Friday.

They think they only need to offer discounts to attract new customers, and returning customers will buy at full price.

Meanwhile, your loyal buyers see new customers getting better deals than they are, and wonder why they bother.

3. Behavioral Engineering

Use discounts to guide behavior that strengthens your margins and your customer experience over time.

Bundling deals like “Buy 3, get 20% off” increase average order value without undercutting profitability.

Subscription incentives turn one-time buyers into recurring ones.

Cart-threshold offers (“Spend $75, get 10% off or free shipping”) push customers to add just one more item.

And app-download discounts treat the offer itself as your cost to acquire a new app user (which, data shows, will lead to stronger revenue over time).

4. Volume

Brands like Shein and Temu are often used as an example of how not to do discounts.

90% off across the board, aggressive promo blitzes, 5 flash sales per day…

But for these brands, it is intentional. It’s strategic.

It might not work for your brand (it probably won’t). But they’re not the first businesses to go all-in on aggressive discounting to drive volume.

These first-order discounts help fill their funnel, collect data, and create habit loops. The high discounts also act as loss leaders; someone comes in to get a massively discounted product (at negative margins), and adds more to their cart (or in their next purchase) that drives more value.

5. Inventory & Cashflow Management

Unsold inventory ties up capital, eats storage costs, and quietly saps your margins.

Here’s the thing about discounting and margins; it’s not always about the sale price vs cost price and how much profit you make.

Too many brands are hesitant to discount a slow-moving product, because they want to maintain enough margin on the sale price.

But a product sitting on the shelf essentially provides zero value to your business, so discounting to clear stock shouldn’t be seen as a loss.

If you overordered a product that doesn’t move, the loss has already happened. You can’t put the genie back in the bottle.

This is more relevant in some industries than others. For grocery, food and bev, supplements, where products have an expiry date, you’ll literally face a point where the product’s value goes to zero.

For durable goods, fashion, etc, your stock might not expire. But slow-moving product is holding up cashflow that could otherwise be reinvested in your business.

In that case, it’s often smarter to run high-value discounts, clear stock, and refocus on winners.

How to Apply This for BFCM

With BFCM coming up, there’s no more important time to think about this.

Every brand will be running deals. But many of them are running deals just because that’s what they think they’re supposed to do.

If you can approach your BFCM offers strategically, you’ll likely be in the top 10%.

Ask yourself:

• Are you discounting with a retention plan in mind — a way to turn that first order into a second (hopefully at higher margins)?

• Are you using discounts to reward loyalty, giving your best customers early access or exclusive offers?

• Are you engineering behavior — driving app downloads, boosting subscription sign-ups, or growing AOV through bundles?

• Are you freeing up cash or using certain products as loss leaders to pull customers into more valuable parts of your business?

All of those are strong, intentional plays. What’s not strong is treating discounts like a seasonal obligation or hoarding margins out of fear.

When you plan your offers with intent, every discount becomes a lever for growth: faster acquisition, stronger loyalty, more long-term value.

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Quick Hits

Shopify Plugin for WordPress

This seems significant.

Shopify released a plugin for WordPress stores. It lets brands who sell on WordPress use Shopify’s backend to manage payments, inventory, etc.

This could be bad news for WooCommerce — who have already been losing major ground to Shopify in recent years.

Read more →

Brands Are Taking Over SMS

SMS used to be where your texts from family & friends showed up. Now it’s your promotional inbox.

Worth thinking about if SMS is a big part of your strategy. It’s still useful; but expect a slow decline as more consumers start to tune out these promotional texts.

Read more →

AI UGC

This is a timely reminder. While AI makes it easy to spin up 1000s of UGC videos for next-to-nothing, this could put you in hot water legally.

AI creators + fake reviews seems like a recipe for a lawsuit.

Read more →

2025 Holiday Shopping Projections

Adobe released their projections for this year’s holiday season.

Some notables:

• +5.3% forecasted overall spend

• +8.5% mobile spend

• Mobile revenue share projected at 56.1% (2.9% higher than 2024)

Also, not surprisingly, a big jump is expected in AI traffic, with an increase of 517.5% YoY projected.

Read more →

How AI-Powered Buying Will Reshape Ecommerce

Came across this good writeup of how the ecom landscape is changing with AI shopping.

It looks at some data updates you need to make, how to clean up your product feed, and how to approach your new sales channel from a marketing perspective.

Read more →

Instacart Releasing ChatGPT Plugin

Another big name jumping on board the AI bandwagon. Instacart is rolling out a plugin for ChatGPT, which automatically turns recipes into shopping lists (on Instacart, obviously).

It’s a great example of how AI is becoming deeply ingrained in the shopping journey… and we can only expect more things like this in the near future.

Read more →

TikTok BFCM Playbook

TikTok has cemented itself as a key sales channel in ecommerce. And I feel like it’s going to play a huge part in BFCM this year.

This playbook breaks down what worked and what didn’t in 2024, and gives tips on crafting a successful BFCM strategy on the platform this year.

Read more →

Lasting Momentum from BFCM

It’s approaching a month until BFCM hits.

Your strategy should already be nailed down. But there’s still time for tweaks.

While it’s running tight to make it a key sales channel, there’s still a lot of value to launching your mobile app before Cyber Week.

This is your biggest acquisition period of the year, and turning the momentum of BFCM into app downloads is he perfect way to keep that momentum going through December, January, and the whole of 2026.

Our BFCM Strategy Report shows why an app is such a valuable asset for BFCM, how apps drive lasting loyalty, and how you can launch in just 30 days.

That’s all for now.

I’ll be back in touch next week, with more on how successful brands are doing CX and retention right.

If there’s any topic you’d like to see us dive into, for either the newsletter or the podcast, just shoot me a message here.

Until next time,

Pietro and The Retention Edge Team

PS: want to boost retention, revenue and profitability? If so, launching your own app could be the best move you make this year.

See how: go to our website to get a preview of your app for free, or shoot me a DM on LinkedIn to talk about it.