How retailers can create a winning seasonal discount pricing strategy

Different seasons raise different questions for retailers: Are we pricing our discounts correctly? How are we positioned compared to our competitors? Are we ultimately set up to maximize our seasonal revenue?

Read on to learn how to conduct a winning seasonal discount pricing strategy. We’ll also cover the best practices for ensuring your discounts are heard by the right audience.

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Understanding seasonal discounts: Benefits and examples

Seasonal discounts are price reductions offered by retailers on products or services during specific times of the year, often aligned with changes in seasons, major holidays, or significant cultural events.

Here are a handful of common examples.

Holiday sales events like Black Friday: Last Black Friday, the United States alone saw more than 75 million shoppers visiting brick-and-mortar — even more than this decided to shop online. On average, Black Friday sales increase year-to-year, and retailers commonly adopt a range of seasonal discount strategies to capitalize on it.

Discounts on clothing at the end of winter or summer: As seasons change, retailers often offer discounts on seasonal clothing to clear out old stock and make space for new collections. This typically happens at the end of winter and summer when consumer interest shifts to upcoming seasonal attire. While this typically applies to clothing retailers, other sectors — sports equipment, home decor, gardening supplies, and other seasonal goods stores — also adopt similar strategies to optimize inventory based on seasonal demands.

Promotions during back-to-school season: Deloitte's recent study tells us that, on average, parents plan to spend $586 per child on back-to-school necessities. Of those parents, 50% use the seasonal discounts to purchase something for themselves too. Certain retailers will leverage the back-to-school season to introduce discounts on a wide range of goods and services, not just limited to school supplies, but also extending to electronics, clothing, home goods, and more.

4 benefits of seasonal discounts for retailers

Those who adopt seasonal discount strategies share similar objectives: create urgency, build customer loyalty, clear inventory, and, ultimately, boost sales.

1. Boosting sales and revenue through targeted promotions: Seasonal discounts attract buyers who may be waiting for the right price drop to make a purchase — 64% of buyers will wait on price drops before buying. By timing these promotions around popular shopping periods or seasonal changes, retailers can maximize their revenue as customers are more inclined to buy in larger quantities or splurge on higher-priced items they've been eyeing.

2. Creating a sense of urgency and driving customer engagement: By offering discounts for a limited time, retailers compel consumers to act quickly. Consumers respond to urgency — so much so that it’s associated with sales increases of over 300%. One reason for this is that consumers don’t want to experience the feeling of missing out. Marketers acknowledge the psychological truth that negative emotions drive consumerism more than positive emotions, hence why the fear of missing out associated with urgency drives more than half of consumers (60%) in their purchasing decisions.

3. Building customer loyalty and repeat business: Some customers will only shop at their favorite retailers when seasonal discounts roll around. Seasonal discounts provide the avenue for retailers to engage with this large base, ultimately driving increased loyalty and reaping the benefits of repeat business.

4. Clearing inventory space: End-of-season discounts help retailers clear out unsold stock to make room for new products. This optimizes the inventory, reduces storage costs, and minimizes losses on outdated or out-of-season items — a win-win for retailers and shoppers.

Developing your seasonal discount pricing strategy: 3 key considerations

Understanding seasonal demands, determining competitor positioning, and segmenting your customer base — three parts of the equation that equals a successful seasonal discount pricing strategy. Let’s look into each:

1. Understand seasonal demands

Sometimes, it’s helpful to look back at past seasonal discount campaigns — or seasonal sales more generally — to determine what went well last time, what didn’t, and how you can adjust accordingly. If you don’t have internal data that provides an indication of seasonal demand, consider consulting industry reports, surveying your customers, or analyzing competitor performance during similar periods.

Ideally, you should cross-reference the data from various years’ seasonal discounts and see if any performed better than the other. Let’s say 2022 performed better than 2023; it’s then about determining if this is because of price positioning, post-Covid influxes, the specifics of your campaign strategy, product assortment, changes in consumer behavior, or other external factors such as economic conditions or new market entrants.

If you determine the reason for 2022’s success is because of controllable factors, such as price positioning, then aim to determine how you can adopt similar strategies and avoid the decisions that led to 2023 resulting in poorer sales outcomes.

2. Determine competitor prices and positioning

Ask yourself the following three questions:

1. What platforms are my competitors using to communicate their seasonal discounts?

The answer to these questions will help to inform your own seasonal discount strategy. It’ll tell you where your audience is likely situated, what forms of media and messaging they respond to, what campaign factors may perform better than others (i.e., paid vs. organic media), how much budget you may want to put into your campaign, and more.

2. What types of discounts are my competitors offering — and are certain discounts seeming to attract more engagement than others?

Expanding on looking into your competitors’ positioning, aim to determine the types of discounts your competitors are making and let it help inform your own strategy. Look through social media comments on promotional material, consider website analytics related to specific seasonal offerings, and aim to determine what promotions are working and which aren’t, and why.

3. How can I incorporate competitor insights while still differentiating our seasonal discount offerings?

The goal isn’t to emulate, but to use the insights you gather from your competitors to avoid pitfalls and capitalize on what you see is working. The metrics to consider include:

• Engagement rates: Monitor how consumers interact with competitors' discounts across different platforms. This includes likes, shares, comments, and click-through rates.
• Conversion rates: If possible, assess how often engagements lead to sales (or likely leads to sales) — through public financial reports, third-party data, software that analyzes digital footprints, or other mediums. High engagement doesn't always mean high sales, and understanding this difference is necessary if you intend to apply insights that are sales-oriented.
• Cross-campaign engagement: If a competitor has multiple promotions running for the same seasonal campaign, analyze the promotions that are bringing in the most engagement and sales. Also, look into the promotions that aren’t performing well and aim to determine why. 

3. Segment your customer base

If you intend to adopt a multifaceted seasonal discounting strategy, consider the following questions:

• How do specific promotions apply to specific customer segments? 
• How can you optimally target the right audience with tailored promotional material? 
• Based on these segmentations, how can you ensure your discount’s pricing meets the needs and demands of each group? 

Here’s how this may look in practice: A multi-chain clothing retailer may determine that there’s significant demand for a t-shirt line in Los Angeles. In response, in their email marketing efforts, they may segment their LA audience with the rest of their subscriber list. As Black Friday rolls around, they begin their email drip feed wherein LA subscribers gain exclusive access to a 35% time-sensitive discount, whereas the rest of the subscriber base access the regular shop-wide sale of 15%.

Ultimately, it’s about determining the individual needs of various groups in your customer base and creating seasonal discount strategies that meet their demands.

Making your seasonal discount campaign heard: Best practices

Once you’ve made pricing decisions based on an understanding of seasonal demands, competitor positioning, and customer base segmentation, it’s then about making sure your offers are heard.

Promote seasonal discounts through strategic channels

It’s likely that upwards of 22% of sales will be done online by 2027. The rise of eCommerce is accompanied by adjustments in the ways that buyers engage with marketing material.

The key questions to ask are relatively simple:

• Who is your customer base, specifically?
• What media platforms do they use, and what forms of media do they like to consume?
• How can you reach them?

Retailers typically adopt an omnichannel approach. Depending on who you ask, this may mean a couple of different things. For our purposes, what we mean is that retailers will adopt both a mix of organic and paid media, across multiple channels.

• Organic media: This refers to marketing assets that are naturally integrated into content, such as blog posts, social media updates, or videos. These assets are typically not paid for directly but rely on the quality and relevance of the content to attract and engage customers. The presumption is that retailers who incorporate organic media into their seasonal discount strategy already have a social media follower base. 
• Paid media: This refers to promotional strategies that involve direct payment to platforms (Facebook, Instagram, LinkedIn, YouTube, etc.) for displaying advertising content. Paid media is useful as it allows for a range of advertising options: On the simpler side, retailers can target ads based on age, interests, location, and other key demographics to ensure their ads reach the most appropriate audience. On the slightly more sophisticated side, retailers can use paid ads to retarget users who’ve engaged in previous campaigns, shopped on their website, visited specific product pages, shown interest in similar products, and engaged with competitors, among other personalized targeting options. 

Depending on the retailer's audience, both organic and paid media will likely be distributed across various channels: Facebook, Twitter, Instagram, and so on. One not-to-be-overlooked channel is email: For every $1 that marketers place into email marketing, they receive an average of $36.

Ultimately, retailers should aim to promote their content through the digital avenues that are most relevant to their audience, inclusive of messaging that their audience is likely to resonate with and find valuable. This is a tailored marketing approach that serves as a stark contrast to one-size-fits-all traditional campaigns that often rely on blanket strategies and broad messaging.

Retailers should also ensure that they have the optimal POS systems in place to ensure a seamless transaction process for customers who engage with their online campaigns. This includes eCommerce payment systems, but also extends to encompass the various in-store payment methods that facilitate quicker, more intuitive checkouts. At Sekure Payment Experts, we pair retailers with the optimal POS systems — eCommerce and/or in-store — that keep costs low and customer satisfaction high.

Measure your outcomes

This includes measuring the outcomes of previous seasonal campaigns to inform upcoming ones, as well as actively measuring upcoming campaigns to shape future efforts.

For your next campaign, consider how you can analyze each step of your campaign’s funnel — from awareness to conversion. The objective is to determine what areas of the funnel aren’t performing as well as they could and how you can adjust accordingly next time.

Across your funnel, the metrics to look out for include:

• Top-of-funnel (TOF) metrics: Website traffic, social media impressions, ad click-through rates, the number of new social media followers, and content shares. 
• Middle-of-funnel (MOF) metrics: Lead conversion rates, email open and click rates, session duration on specific product pages, content downloads (such as eBooks or white papers), and interactions with interactive tools (like configurators or calculators).
• Bottom-of-funnel (BOF) metrics: Conversion rates, customer feedback of transaction seamlessness, sales revenue, average order value, customer acquisition cost, number of transactions, and customer lifetime value.

Gain insights and ensure a seamless customer experience with Sekure

A central component of your pricing strategy is ensuring that your POS system is one that facilitates ease-of-payment, compliance, security, and efficiency throughout the customer's purchasing process.

Whether you intend to run your next seasonal sale online or in-person, Sekure’s Payment Experts can match you with the POS system that matches your specific business needs. We provide retailers with advanced payment solutions that are both flexible, scalable, and cost-effective — allowing for seamless integration across multiple sales channels.
Learn more about how Sekure’s POS solutions help retailers.