Sale is not a novel strategy for ecommerce brands, and is commonly used in tandem with a paid media strategy to maximise profitability, boost customer acquisition and re-engage existing customers.

However, there remains speculation surrounding the ideal sale strategy and how best to return to full price without seeing a significant drop off in performance. Should surprise, short term flash sales be prioritised over longer sale periods? When do you come out of sale? How do you transition to full price orders again?

So what is the ideal sale strategy? How best can we transition from sale to full price seamlessly? What is the impact on AOV, CVR and customer receptiveness?

The Benefits of Sale

Sale has multiple functions, including shifting high volumes of existing stock, boosting performance during slower periods of the year as well as acting as a new customer acquisition tool.

New customer acquisition

The threshold required to acquire a new user is lowered during sale periods due to the hook of lower price points, therefore driving strong levels of new customer acquisition at lower customer acquisition costs (CaC).

Supporting this customer acquisition piece with paid media is beneficial:

1. Ensure that campaign budgets are not too heavily restricted
2. Expand targeting to be broad to increase reach
3. Use product sets on meta ASC/Catalogue sales campaigns and listing groups on Google performance max to guarantee visibility for products in the sale

It is important to maximise customer receptiveness early on in sale which often sees an initial spike, before gently tapering off while fatigue to sale messaging sets in. Therefore, ensuring the above steps are taken proactively ahead of sale is vital.

Furthermore, a compelling level of discount (not too heavy as this impacts margin) will also allow advertising to be more impactful. For example, 5% discount doesn’t have the same ring to it as 30%. Phasing increased price markdowns can also help to delay the fatigue to sale messaging, aiding in the acquisition of ‘stubborn’ users who may react to higher discounts.

Finally, in order to maximise the new customer acquisition piece, there are low cost options that can be actioned towards the end of sale. A reach campaign on Meta, targeting users who are yet to be served a sale ad is an excellent example of this. This allows increased audience penetration, guiding users into the funnel to either convert at the first touch point, or retargeted by existing remarketing audiences in place. The benefit to using reach is self explanatory, leveraging a campaign objective optimising towards reach at a healthy frequency, with significantly more efficient CPMs than conversion objective campaigns.

Re-engaged lapsed and high value existing customers

Using your CRM database effectively during a sale re-engage retained users back to the brand who may not have shopped for an extended period of time (defining what a ‘lapsed user’ to your business is key here).

Two effective channels to reach your existing base would be via email and SMS, however, depending on the receptiveness to the sale and the scale at which you desire to operate, you can support this with paid channels.

As with the new customer acquisition strategy, we have found using reach and frequency objectives on Meta to be another cost effective way to penetrate your audience lists, driving a far more efficient CPM, but with the same likelihood to convert due to the high intent nature of the audience.

Improved conversion rate (CVR)

Sale acts as a hook for both new and existing customers. As a result, CVR will often see a strong upward trend for the same level of investment and impressions served, meaning sale acts as a certified vehicle for scalability.

The Drawbacks of Sale

Exiting sale and transitioning from markdown to full price presents itself as a challenging task, and this period is usually followed by a drop off in performance. The main drawbacks of sale are typified by:

• Shifting customer expectations
• Reliance on sales volume due to the relationship between AOV and CVR
• Sale exits are often challenging

Customer Expectations Change

Depending on the length of sale (this typically applies to longer periods), it can negatively impact future, or existing customers. The reason being that this boils down to the expectation of your brand being sale-first and full-price second, affecting LTV of customers long term.

There’s no doubt sale and discounting is a massive pull for anyone. However, there has to be a fine balance between indulging in the wins of sale, but also transitioning back to full price in a smooth fashion.

Reliance On Sales Volume

As expected, AOV decreases significantly during sale, simply due to the price markdown lowering the average basket value.

Given this trend, there is a reliance on CVR increasing at at least the same rate that AOV decreases in order to see consistent revenue and ROAS (if spend remains stable).

This reliance can sometimes see sale fall flat, if these trends do not map out to the idealised situation.

Sale Exits Have Consequence

Brands can execute the most successful sale period in their history, but can still be liable to a disruptive transition period from discounted price to full price.

The effect of exiting sale often results in a significant drop off in the CVR, due to the return to full price, and a sluggish return to pre-sale CVR levels.

This translates into a significant drop off in purchase volume, revenue and therefore ROAS, which can act to cancel out the strong performance achieved over the sale period. Therefore, a strong exit sale strategy is key.

Key Elements To Ensure Strong Performance Across All Aspects Of Sale

Explore Flash Sales

Brands which adopt a surprise flash sale can limit the impact on full price viability and strength, and inspire a limited time only environment.

The fear of missing out can also encourage a higher basket size

Reduce Sale Length

Many brands will be guilty of prolonged sale periods stretching several months in some cases, which can lead to significant fatigue and the reliance on increasingly high price markdowns which ultimately impacts AOV and CVR heavily in post sale.

Prioritise shorter, more focused sale periods, ending on a high rather than extending into periods of poorer performance.

Introduce New Collections Post-Sale

Launching new lines or collections can help to retain consumer interest post sale, and mediate slower periods of performance when returning to full price.

From a logistical standpoint, ads for new collections can be run in tandem with sale, in order to allow ads to exit the learning phase and reduce the significant chop and change from sale to non sale ads.

Suitability of Product

The suitability of the product range on offer will have a significant impact on the success of sale. For example, in a summer sale, extra stock from Autumn/Winter or Spring would be less successful than specific summer styles. This is a common occurrence looking to maximise stock velocity and shift existing stock, however can often fall short in terms of suitability due to seasonality.

In Summary

Sale has and will always be an integral part of a brand’s marketing strategy, acting as a powerful acquisition tool and a vehicle to re-engage lapsed users. However, sale does not come without complexities and challenges, and so should be approached with clear timelines and strategies to exit sale effectively.

Explore varying the length of sale (to avoid fatigue) launching new collections concurrently with sale towards the end (to re-establish the viability of full price products) to help exit sale effectively, and reduce the see-sawing behaviour associated with transitioning from sale price to full price.

Finally, there is no one size fits all approach to sale and so should be carefully considered to suit your own brands needs.