When sales targets start looming like an angry warehouse manager, it’s tempting to reach for the easiest lever in the book: a discount. A rebate here, a two-for-one there, and just like that, stock starts moving. Job done, at least for now.
But before you start tossing out price cuts like trade show freebies, it’s worth asking a more strategic question: what’s the real cost of all that discounting?
While discounts might offer a short-term fix, relying on them too heavily is like putting all your eggs in one very wobbly basket. And in wholesale, that can quickly lead to a mess of eroded margins, confused forecasting, and fickle customers.
Yes, discounts can help land a sale. But they can also quietly chip away at your business from within. Lower margins strain operations, compromise the quality of your service, and make it harder to plan with confidence. Meanwhile, customers get used to waiting for the next deal, rather than building any real connection to your brand. And as promotions become more frequent, your value proposition risks getting lost in the noise, fuelling a price war that nobody really wins.
Numbers don’t lie
According to the Phoenix Strategy Group, a 10% discount on a product with a 40% margin requires a 33.3% increase in sales just to break even. Push that to a 20% discount, and you’d need to double your sales. Go to 30%, and you’re looking at four times the volume just to stand still.
So, what’s the alternative?
Rather than leaning on price cuts, there’s a smarter, more sustainable way to grow: build customer loyalty through value. And not just value in the financial sense, but emotional value, experiential value, and recognition that truly resonates with your customers.
Here’s the thing about cash incentives: they’re forgettable. A quick rebate might feel like a win in the moment, but it’s gone just as quickly. Compare that to a well-earned reward, something memorable like a coffee machine, football tickets, or a spa day, and you’ve got a whole different level of engagement.
Our Money vs. Memory blog explores the science behind why experiences beat cash every time. Points-based rewards tap into emotional satisfaction, trigger positive memories, and create social moments that customers talk about and share.
Chronic discounting, on the other hand, doesn’t drive true customer loyalty. It breeds dependency. Customers learn to wait for the next offer, not because they’re engaged with your brand, but because they’ve been trained to treat you like a deal dispenser. That’s not loyalty, it’s transactional.
To shift this dynamic, it helps to focus on your MVPs, your Most Valuable Purchasers. These are the buyers who order regularly, spend well, and often influence others. Rather than handing out blanket discounts, recognise and reward the behaviours that genuinely drive your business forward. That could mean encouraging repeat purchases with tiered perks, guiding them towards higher-margin products with strategic incentives, or simply staying front of mind with regular, meaningful engagement.
We talk more about this in our Snog, Marry, Swerve blog, where we explore the different types of customers you’ll encounter, some are in it for a quick fling, some never quite commit, and others are ready for a long-term relationship. The key is knowing which ones to invest in, and how to nurture those connections so they stick.
This is where a well-designed loyalty programme really comes into its own – and has a positive impact on your bottom line. See this reflected below.
It gives you more than just a way to reward, it gives you insight. You’ll see who’s buying what, when, and how often. That allows you to personalise offers, create smarter segments, and even surprise top performers with exclusive rewards that turn them into advocates.
Think of it like this: discounts might win today’s order, but loyalty builds next quarter’s pipeline
A rebate is firewood, it burns fast. But a reward programme? That’s a tree. You plant it, nurture it, and it pays back season after season.
The impact goes beyond just transactions. Loyalty programmes let you create more meaningful interactions that contribute to long-term customer retention. You can run gamified challenges that drive engagement, introduce learning modules to help customers sell smarter, spotlight strategic products to boost visibility, and celebrate milestones that show appreciation. Suddenly, you’re not just selling, you’re creating an experience customers want to be part of.
At the end of the day, customers aren’t just buying products. They’re buying how you make them feel. When you make them feel recognised, valued and rewarded, they don’t just come back, they become your biggest advocates.
So, rather than training your customers to wait for the next deal, give them something they’ll remember. Build loyalty that lasts, strengthen customer retention, and maintain margins that don’t collapse under pressure.
Ready to turn one-time buyers into long-term champions? Let’s talk about how a tailored loyalty programme can help protect your profits and grow your brand.
