How to maximize profits without losing brand equity


What’s your go-to strategy if you want to increase sales for the month?

Many eCommerce store owners will choose to run promotions and offer discounts, but here’s what they don’t realize…

While this might give you a nice boost in short-term revenue, it has the potential to hurt your brand reputation and equity in the long run.

I mean, think about it:

Do you really want to be known as that eCommerce brand who runs 50% off deals like clockwork every month?

But with 80% of shoppers identifying as value-seeking consumers, offering your customers a discount on your online store is still one of the best conversion-boosters out there. 

Although, for high-growth merchants looking to maximize profits while maintaining a strong brand equity, it might not be the best idea.

In this article, we teach you how to grow your revenue and profits without compromising on your brand’s perception.

Let’s jump right in!

What exactly is brand equity?

To make sure we’re all on the same page, let’s take a second to define the term “brand equity.”

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Simply put, brand equity refers to the premium that you can generate from a product with a recognizable name.

Now, there’s an important distinction to be made here:

Brand equity has NOTHING to do with the actual value that consumers get out of your product. Instead, it’s about the perceived value of your product.

If your product is actually pretty kickass, but nobody knows about it, then you’ve got no brand equity -- simple as that.

Now, you might be wondering…

Why is it so important for my brand to be recognizable, or reputable? Can’t I compete based on other factors?

Well, you’d be surprised about how powerful a recognizable brand name is.

The numbers don’t lie:

69% of consumers prefer to buy new products from a brand they are already familiar with, rather than buy from an unknown brand.

What if that unknown brand offers cheaper products?

You’d be surprised… this makes no difference.

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69% of consumers would still prefer to buy products from a brand that they know.

Food for thought, huh? That brings us to the question...

Is lowering your prices all that bad?

At this point, we’ve established that brand equity is more effective than low prices when it comes to convincing customers to buy.

But brand equity takes time to build, and it’s not something that you can achieve overnight.

So if you’re in a pinch, is lowering your prices really all that bad?

The answer is a resounding YES.

First and foremost, lowering your prices causes your consumers to look at your brand in a different light.

To these guys, it’s simple.


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High prices = high quality.

Undiscounted prices = high quality.

Low prices = poor quality.

Discounted prices = poor quality.

If you’re interested in the science behind it, this article by sums it up nicely.

In any case, here’s the bottom line:

The minute you lower your prices, consumers will think of your brand as less premium, which in turn affects their willingness to pay.

Think about it…

Do you ever see luxury brands such as Hermès and Prada on sale?

Our point exactly.

Alright, moving on!

If you’re in a highly competitive industry, there’s another reason why lowering your prices isn’t a strategic move - and that’s because your competitors will follow suit.

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You probably know this already, but it’s so important that I’m going to say it again anyway:

A price war is a lose-lose for EVERYBODY involved.

Unless you’re the market leader and you’re 110% confident taking on your competitors, I suggest not going down this route.

Last but not least, lowering your prices also brings in the wrong type of customers.

I’m talking about those folks who devote their days to clipping coupons and scouring the web for giveaways and cheap deals.

Say you run a clothing eCommerce store. These people might be the first to snag your discounted items that go for $5 or $10 a pop…

But do you really think they’ll come back and pay for an $80 pair of jeans or a $150 blazer?

C’mon, you’re a smart person.

Level with me - you know the chances of this happening are close to zero.

How to increase profits without lowering prices

Now that you can’t rely on lowering prices anymore, how exactly do you go about increasing your sales and profits? Read on to find out more!

Exceptional customer service

If you’ve never prioritized customer service, you should definitely do so, pronto.

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Why? For one thing, statistics show that US companies lose more than $62 billion annually due to poor customer service.

Now, I know that customer service doesn’t feel super important in the grand scheme of things.

Heck, plenty of eCommerce store owners would rather spend their time on optimizing their PPC ads rather than improving their service.

But here’s what you need to know: After one negative experience with a company, 51% of customers will never do business with that company again.

Think about it:

You’re dropping $10, $20 to acquire a new customer on Google AdWords…

But then you let this customer churn after one transaction because you can’t be bothered to improve your customer service.

Doesn’t make sense, does it?

But hey, it’s not all doom and gloom.

If you do manage to nail your customer service, you’ll see your revenue and profits shoot through the roof.

The average US consumer is willing to spend 17% more to do business with companies that deliver excellent service.

And 7 out of 10 US consumers HAVE spent more money to do business with a company that delivers great service.

I personally have stopped buying from companies entirely for poor customer service, and I’ll bet you have too.

To learn more, check these tips to maximize your eCommerce customer service, as well as the 10 principles of great eCommerce customer service.

Customer loyalty and referral programs

Another great way of increasing your sales and profits is by engaging your existing customers.

If you haven’t already done so, come up with a great loyalty program that incentivizes your customers to spend more.

How should you structure your loyalty program, and what perks should you give your members?

Well, this depends on your target audience.

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Generally speaking, you won’t go wrong with offering discounted or free products to members.

On top of that, you might also want to sweeten the deal with free shipping or invite your members to exclusive products or events.

Worried about how much you’ll spend?

Obviously, it’s not wise to splash out on organizing huge scale events complete with free-flow champagne.

That said, it is okay to allocate some budget to your loyalty program. (Exactly how much you should allocate depends on various factors, including your Average Order Value and Customer Acquisition Costs).

Remember, at the end of the day, you’re cultivating relationships with your loyal customers, who will go on to spend more with you.

Statistics show that customers who are members of loyalty programs generate 12% to 18% more revenue than non-members, so it’s a worthy investment!

To learn more about loyalty programs, read our article on how to create a loyalty program that actually works.

Loyalty programs aside, you can also experiment with referral programs.

With these programs, you’re getting your customers to refer their friends in exchange for cash rewards or points they can put towards their next purchase.

How you do this is really up to you.

You can give your customers a cash incentive…

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Or a discount coupon. Just make sure you’re rewarding your customer for each successful referral (E.g. when their friend makes a purchase), and not for every attempted referral.

On top of that, be sure to make it easy for your customers to share their referral code.

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Ideally, your customers should be able to share their codes with a single tap of a button.

Don’t worry, you don’t need to build this functionality from scratch - simply use a tool like ReferralCandy.

Last but not least, be sure to ask your customers for a referral at the right time.

If someone is browsing your website for the first time, and you serve them a pop-up asking them to refer you to your friends, that’s obviously not going to happen.

Instead, you should ask for a referral immediately after your customer has purchased your product (or once they’ve received it).

Assuming they’re happy with your product and service, there’s a pretty good chance that they’ll help you spread the word!

To learn more about referral programs, read our guide on referral marketing.

Gifts with purchases

Picture this: all your competitors are running promotions and discounts, and while you don’t want to lower your prices, you’re feeling the heat.

What should you do?

Simple - offer a gift with purchase instead!

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Here’s why gifts with purchases are a great idea.

First, everyone loves free stuff.

Think about it… people would gladly stand in line for HOURS just to get a free ice cream at Ben & Jerry’s Free Cone Day.

So, yes, offering a gift with purchase will definitely help you win over your customer.

The best part? It doesn’t come at the expense of your brand reputation or equity.

When you offer a gift with purchase, your customer’s reaction is simply: “Wow, that’s generous of them!”

Or perhaps: “Score! That’s a good deal.”

They’re not thinking: “Yikes, this product is so heavily discounted. I bet it sucks.”

See the difference?

Another perk of offering a gift with purchase is that this typically costs less than running a standard promotion.

If you offer 20% off storewide, and your customer purchases a $100 item, you’re out by $20.

If you run a free gift with purchase promotion, on the other hand, you just have to account for your cost of goods.

You could gift a power bank that costs you $4 a pop, which would give you a decent margin. (You’d still advertise the market price of the power bank (say $20) though, so the perceived value is higher!)

Last but not least, running a free gift with purchase promotion is also a strategic way of getting rid of old stock.

If you’ve got old inventory sitting around, you definitely want to get that off your hands.

So go ahead and run the promotion!

You’ll make your customers happy AND save on your warehouse space. If that’s not a win-win, I don’t know what is.

Reframe your prices

Here’s a golden rule to keep in mind when it comes to pricing your products… it’s all about how you frame it.

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Say I’m trying to sell you my company’s product - an AI scheduling assistant that helps you book all your meetings.

It sounds like a cool product, but it costs $30 per month, and you’re not keen on incurring an extra expense.

Now, what if I asked you how many meetings you run per month, did some quick calculations, and told you that this tool would save you 21 hours per month?

We’re getting somewhere… but I’m not done yet.

I can go one step further and estimate how much my tool would save you in cold, hard cash per month. Say it’s $540.

So here’s how I’d frame it:

You’re spending $30 per month, but this saves you $540. That’s a net profit of $510.

Now, does the decision seem like a no-brainer?

By the way, I’m drawing inspiration from a real-life product with this example. This AI scheduling assistant is called Evie, and the company has a nifty ROI calculator on their website.

Personally, I think this calculator is pretty genius.

Now when anyone thinks of signing up for Evie, they’re not thinking of it in terms of the $30 that they have to spend.

They’re thinking of that $510 that they save.

Makes a huge difference, huh?

Now, I know the above example deals with a SaaS tool, but you can still apply the same concept of framing to eCommerce.

If you’re selling scratching posts, for example, talk about your product in terms of how much money it’ll save you (because your cat isn’t destroying your furniture).

If you’re trying to upsell your customer with an extended warranty, talk about how much it’ll cost them to replace their device if they don’t purchase the warranty.

You can also make your prices seem more reasonable by working out the average price per use or consumption.

Say you’re selling tea, and a 500g bag of tea leaves goes for $40 on your eCommerce store.

$40 sounds like a lot to pay for tea. But when you state that this lets you brew 200 cups of tea at an average price of $0.20 per cup, it suddenly becomes a steal.

And that, ladies and gentlemen, is the power of framing!

Communicate your unique selling proposition (USP)

If you don’t want to lower your prices, you’ve got to convince your customers that your products are worth their money.

Unfortunately, this is easier said than done.

Now, I know a lot of eCommerce store owners like to pepper their product descriptions with phrases such as:

  • Superior quality
  • High quality
  • Made to last
  • Lovingly crafted

Ready for some tough love?

These phrases are meaningless, and they aren’t convincing AT ALL. Everyone can say that their product is high quality, and everyone does say that.

So how do you set yourself apart from your competitors?

Simple. Stop using these generic phrases, and instead focus on communicating your USP.

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Maybe you’ve got an awesome returns policy.

Maybe you make your products locally, and you don’t rely on sweatshops in China.

Maybe your product is more durable and lasts 2x longer than your competitors’ products.

Regardless of what it is, make sure you communicate this clearly to your audience.

Other than simply featuring your USP on your homepage and product pages, go a step further and create product comparison charts and blog articles for your consumers.

You already know that they’re going to research their other options, so you might as well lay it all out for them!

A final word on maximizing profits & maintaining brand equity

Quick disclaimer: I’m not saying that you should NEVER lower your prices, or that lowering your prices will definitely cause your business to crash and burn.

Running discounts is one of the easiest ways of increasing your revenue in the short-run, and if you’re just trying to make a quick buck, then go ahead and offer all the discounts you want.

But if you’re in this for the long haul, and you’re trying to build up your brand?

Then you should definitely go easy on the discounts.

There are tons of other ways in which you can maximize profits, yet still maintain brand equity.

If you found this article useful, please take a second to share it with your other entrepreneur friends!


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Bill Widmer

Written by Bill Widmer

Bill is an eCommerce content marketing and SEO consultant. He's run several stores and worked with many well-known brands including A Better Lemonade Stand, SaleHoo, and Lifehack.

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