One of the biggest challenges that brands have faced over the past few years is navigating the heavy reliance on sales periods. When a brand leans too much on discounting, it creates a pattern where performance marketing takes a significant hit outside of those promotional windows.

To understand this better, it’s important to consider why some brands depend so much on sales and discounts. These strategies often play a crucial role in driving short-term revenue, clearing excess inventory, and maintaining efficient stock turnover during slower periods or seasonal transitions. Sales can also free up warehouse space for new collections and re-engage customer interest during quieter trading periods.

But here’s the challenge: transitioning from a discount-driven model to a more premium, full-priced approach - without negatively impacting overall revenue. This shift is critical for brands looking to build long-term value and reduce their dependence on short-term fixes.

How does discounting, despite its perceived top line benefits, create challenges that undermine sustainable growth?

Why excessive discounting is negatively impacting the brand

When external factors impact trade, it’s tempting for brands to rely on flash sales to drive quick revenue. However, excessive discounting can have lasting consequences. As Simon Sinek points out in Start with Why, repeatedly lowering prices conditions customers to expect discounts, making it difficult to re-establish value later. Brands risk eroding their margins, devaluing their offering, and turning their products into commodities rather than premium or differentiated choices.

Breaking free from this cycle requires a shift in strategy - one that prioritises long-term brand equity, customer loyalty, and value-driven messaging over short-term price incentives.

The long-term impact of discounting on brand success

Discounting may offer immediate gains, but its effects on long-term brand success are far from positive. Numerous studies have explored this, and the findings are clear: discounting strategies can significantly hinder performance and customer loyalty.

One study revealed that shoppers whose first purchase is induced by a discount are 50% less likely to make a second purchase. This not only weakens customer lifetime value but also impacts the effectiveness of performance marketing, as these shoppers are less likely to convert into loyal, repeat buyers.

Another study found that moderate sales can build some loyalty, excessive or frequent discounting diminishes the perceived value of a brand or product. Over time, this erodes consumer trust in paying full price, creating a race to the bottom.

Brands like Shein and Temu thrive on ultra-low pricing but face increasing scrutiny for unsustainable practices. Although their aggressive pricing gained them significant market share during the pandemic, their models have shown vulnerabilities in adapting to long-term market changes and shifting consumer attitudes toward sustainability and quality​.

The disadvantages of heavy discounting

While discounts can drive short-term sales, a discount-heavy strategy often creates long-term challenges for brands. Customers begin to expect sales, discouraging them from paying full price and creating a damaging cycle. Some of the unseen impacts include:

Increased customer acquisition costs

Shoppers who purchase during sales are 50% less likely to make repeat purchases, leading to a significant drop in Customer Lifetime Value (CLTV). When combined with a lower Average Order Value (AOV) during sales periods, the long-term impact on a brand becomes clear.

This puts added pressure on acquisition channels to drive down the cost per acquisition (CPA) just to stay profitable - both during and outside of sale periods.

If you want to learn more about CAC and CLTV, we recently wrote a blog on this topic. You can read it here.

Decreased brand trust

From the consumers perspective, brands that are constantly running sales can appear low-quality or lacking confidence in their product’s value. This perception can undermine brand trust and lead consumers to believe that the product isn’t worth full price.

This reduced confidence discourages recommendations, diminishing organic growth. Worse, when customers do recommend your brand, it may come with the caveat, “Wait until it’s on sale,” which diminishes your brand's perceived value and visibility outside of paid advertising.

A long-term impact on profitability

Frequent discounting forces brands to prioritise short-term advertising results over meaningful brand-building efforts and non-direct response marketing. When customers fail to make repeat purchases, businesses become reliant on achieving a low enough CAC to turn a profit from the very first order - typically one with a much lower margin due to discounts.

While occasional, well-timed sales can be beneficial, frequent heavy discounting creates a damaging cycle. As sales become a regular occurrence, acquisition costs rise, revenue outside of sale periods declines, and pressure mounts to re-enter sale mode to maintain volume. This pattern traps brands in a loop that erodes margins and undermines long-term growth.

Strategies to transition away from heavy discounts

Shifting from a discount-heavy model to a strategy focused on full-price sales requires a mix of thoughtful planning and clear execution. Below are several strategies to help make this transition successfully.

Plan structured sales periods

Rather than eliminating sales altogether, consider refining their frequency and duration to create a more structured discounting approach. Adopting a strategy like the four-peaks methodology allows you to retain the benefits of sales while reducing their overuse.

By planning four key sale periods - such as February, April, July, and the holiday season - you can supplement slower trade periods with well-timed cash injections. This structured approach reduces the pressure to run additional, unplanned sales throughout the year. It also provides price-sensitive customers with predictable opportunities to shop, ensuring they remain engaged with your brand.

Limiting each sale period to a maximum of two weeks helps maintain exclusivity and maximises impact, encouraging customers to act quickly and avoid waiting indefinitely for discounts.

Set boundaries for wholesale discounting

When looking at DTC brands with a wholesale element, one friction point can be that wholesale partners run sales to clear older stock and generate cash flow for new inventory. Brands can adjust their terms of service with wholesalers to limit the timing and extent of discounts, but this may make wholesale agreements less appealing and reduce the number of partners willing to participate.

For further insights on managing this balance and examples of how other brands are navigating it, check out our blog here.

Leverage customer insights to drive value

Brands need a strong understanding of who your customers are and why they have purchased from you. Consumer surveys can be a great way to uncover what they want, especially when it comes to sizes and colors. Identifying common issues, like missing color options or frequently out-of-stock sizes, can help guide product development and buying decisions.

Sending surveys to your customer database on a semi-regular basis tailored to existing, lapsed, and prospective customers can highlight key friction points. This insight allows you to add value, remove barriers to purchase, and foster brand loyalty. For example, if unclear size guides are causing hesitation to buy at full price, surveys can help pinpoint and address the issue. You can read more about Census, our post-purchase survey, here.

Introduce alternative pricing strategies

If price is a factor in deterring first-time purchasers:

• Introduce a range of products at a lower price point, that sits above where you have traditionally sat when on sale e.g; you discounted on average 40% last year during sale, so introduce a line of products that are 35% cheaper than your core items but come in limited styles or colours.

• Make sure this particular product range is never discounted, giving consumers more incentive to take the leap and make the first purchase.

This ad walks through the different promotions and collaborations Percival ran throughout the year. It takes a fun, community-focused approach while reinforcing the value behind their pricing.

This ad dives deeper into the cost breakdown of materials, manufacturing, and shipping, even outlining rough margins and how the remaining revenue is spent. It’s informative, casual, and reinforces the brand’s transparency and honesty.

Similarly, brands like Polène include FAQs explaining that their pricing is the fairest they can offer year-round and that they do not run sales or discounts. This strategy is most effective if you’ve moved away from frequent discounting. To ease the transition, clearly explain your policy on discounting to customers, reinforcing why it aligns with your values and the quality of your products.

Final thoughts

While discounting may provide immediate sales boosts, its long-term effects on customer loyalty and profitability can be damaging. Shifting to a strategy that emphasises full-price sales and brand value can build stronger customer relationships and ensure sustainable growth.

Key takeaways:

• Over-reliance on discounting can condition shoppers to wait for sales, leading to a revenue drop during full-price periods and stalling profitability. Frequent promotions also weaken customer loyalty by shifting the focus from brand value to price.
  
  

• For premium brands, constant discounting dilutes their market position, undermining brand equity and making it harder to attract high-value customers who are willing to pay full price.
  
  

• Long-term discounting trains consumers to avoid full-price periods and purchase exclusively during sales, restricting business cash flow while they are at full price.
  
  

• CAC and retention rate can be impacted by “premium” brands being on sale, cheapening their overall position in the market. Customers acquired in sale have a significantly lower LTV and purchase frequency than full-price customers.
  
  

• Several key points need to be considered when transitioning from a sale to a full-price brand: price strategy, brand position, and wholesale relationships.
  
  

• Modern consumers buy into brands as much as they buy into products, so improving your brand image can help when transitioning to a full-price strategy - ultimately driving long-term profitability and stronger customer loyalty.