Grow Your Business

We offered our first discount in 8 years. It didn’t go well.

In December, we did something extremely unusual for our business: We ran a discount.

And the result was … a total flop.

In fact, here’s an actual chat from the moment we sent the email out:

Screen Shot 2018 01 19 at 9.47.48 AM

I’ve been publicly against discounting for a long time.

In general, discounts are a lazy way to convert customers to buy. Most marketers lead with price, discounting by 25%, 40%, even 50%, watching a surge of orders come in, and assuming they’ll sell those customers more on the back-end.

What they don’t realize is that those discount customers will hardly ever convert to full-price buyers. These discount customers generate a disproportionate number of refund requests and dramatically cut into profit.

These businesses are now in the discount spiral of creating more and more discounts for the same result. They stop innovating and creating truly must-have products, instead leaning on the convenient crutch of discounts. Over time, frequent discounters like Gap train their customers to wait for the next sale.

It’s the rare company that holds the line on pricing, creates incredible products, and charges a fair price to customers who are delighted to pay. This is what we did in our business for years and years.

So why did we try a discount?

And why did it fail?

Why we ran a discount for the first time in 8 years

We’re always looking at our business and testing our assumptions. Here are a few core assumptions we’ve tested:

  • People won’t pay for content online (they do — our top 1,000 customers spent more than $8 million with us)
  • People won’t read long pages (our top sales page is more than 75 pages long)
  • You need to leverage social media to sell (well, this might be true … but my social media doesn’t sell much of anything)

We want to balance our core values — which don’t change — with testing different tactics to reach our market. Those tactics change over time. As Marshall Goldsmith says, “What got you here won’t get you there.”

So when we took a holistic look at our business, paying special attention to the hundreds of thousands of readers who have never purchased anything from us … we noticed that “price” was one of the major objections.

If you had a group of hundreds of thousands of loyal readers who’d never bought from you, and their primary reason was “price,” what would you do?

We thought about this carefully.

  1. We knew that we had a large segment of readers who had never bought from us and that “price” was a major barrier for them.
  2. We knew that when a customer buys from us once, they tend to love our material and buy from us again. The key was getting them to buy for the first time.
  3. Therefore, we concluded that if price was a concern — and we could remove that barrier — we might build a group of long-term customers who otherwise would not purchase from us.

Hence the idea of a one-time discount.

We also studied a wide variety of other companies that discount, including discounting a can of soda cheaper when it’s cold outside, the SaaS product that uses discounts to encourage yearly payments, and premium brands that use “whisper sales.”

We decided to make a bet and try a one-time promotion offering special pricing for select courses.

How we rolled out our special pricing campaign to 120,000 people

Here was our plan:

Step one: Send an email to a small cohort with a subtle promotion. Watch reactions.
Step two: Depending on reactions from the test cohort, we could continue by sending to a larger cohort.
Step three: Send a second, shorter email that more directly mentioned the promotion to everyone. Sales would close that night.

We had two rules:

  1. No leading with price. We would not create a gaudy $9.99 $3.99 pricing page.
  2. We would limit the promotion to a few select courses.

Our goal here was “tip” prospects who were on the fence about trying one of our courses, knowing that our product quality and customer service teams would convert them into long-term customers.

There were a few possible outcomes we were prepared for:

  • Our readers revolt and feel slighted that we offered discounts after years of discouraging them. And what would the people who have already paid full price think?
  • It blows up and we convert a massive crop of students who wouldn’t have normally signed up.
  • It’s middle of the road, with a few folks signing up and little impact to our bottom line or brand.

After agreeing on the approach, we set aside a week on our calendar and hoped for the best.

Here’s what email one looked like:

Notice that the email led with value. 2/3 of the way down, we introduced the special promotion. There was no mention of it in the subject line. This was all intentional.

We took great pains in writing this email, drafting several versions with multiple edits before settling here.

When you clicked, the page linked here:

This page featured short snippets of the selected products. Each button highlighted the savings (“Save $500”). In retrospect, we should have spent more time describing the products. It may have helped to include prices of the products.

Remember: we wanted to send to a tiny subset of people first to avoid totally misreading the situation and angering our readers. So we sent to a VERY small group of 2.6k. And then, this happened:

First cohort (2,600 people):

IWT Email 2 1

What you’re seeing is a 32% open rate and a 1.6% clickthrough rate. These are relatively normal numbers for us. And most importantly, we didn’t get any negative reactions about offering a discount.

But…

There were no responses either. There were also no sales. This may have been a sign no one cared. Or that we sent it to too few people. We weren’t sure.

So, per our plan, we sent to more people (but not EVERYONE ELSE) later in the day.

Second cohort (30,000 people):

IWT Email 4

All of these numbers are fairly standard. In other words, people were getting the email, reading it, and some were clicking. We got similar responses — in other words, no emails back (positive or negative).

And also…

No one was buying.

No response. No sales, no email replies … nothing. It was like we were shouting into a dark void.

Screen Shot 2018 01 19 at 10.00.15 AM

You would expect something. Maybe angry emails. Maybe people saying “FINALLY! I’ve been waiting!” But to get nothing at all?

Ugh.

In fact some of the only reactions we received were readers (rightly) wondering why we were going back on one of our own rules.

Screen Shot 2018 01 19 at 9.52.27 AM

It was time to make a call. We’d seen barely any email responses and fewer than 10 sales. We decided to send to the rest of our segment and watch the reactions overnight.

Third cohort (86,000 people):

IWT Email 3

And the result was the same as the previous two cohorts: nothing.

Everything was technically working. The sales forms worked. Clicks were being tracked.

Eventually, we started to see a few sales. But no questions about the promotion or the courses. It was like we threw a party and nobody came.

Here’s my question for you: If you were in this situation, what would you do? Here’s the scenario:

  • You just emailed your entire segment with a sale offer, but you’ve gotten poor response: A few sales, no reply emails.
  • You’ve doubled-checked your technology and everything is working correctly.
  • You have a second email scheduled for tomorrow.

What would you do?

We huddled and decided we should do something uncharacteristic for us. We quit. We cut our losses and didn’t even send the second email.

MA = marketing automation team. EOY = end of year. SOD = start of day.
Ryan is ordering that the second promotional email be cut.

We decided to reconvene in the morning. Maybe people would read it and buy later. Maybe people were at work and wanted to get home before buying. At this point, WHO THE HELL KNEW? Certainly not me.

My fiancée noticed I was walking around aimlessly with a blank look on my face. “What’s going on?” she asked. I told her. (She used to be a retail buyer for 8+ years.)

Her response:

“Oh, boohoo … you run a business where your customers don’t love discounts and only want to pay full price. What a tough life!”

DAMN, roasted. LOVE YOU BABE!

I woke up the next morning and asked my team for the numbers. What did weeks of planning, lots of rewrites, and endless wrangling over the positioning get us?

$42,384.

Now $42,000 is real money to a solopreneur or small team. But when you factor in our opportunity cost — all the hours of brainstorming, copywriting, design, and testing, plus what we could have done with other marketing strategies — this was a loss.

What we learned

There are lots of possibilities for why this didn’t work. In descending order:

  • The promotion wasn’t big enough (10% off doesn’t motivate as much as 50% off)
  • The promotion wasn’t clear enough (it was buried at the bottom of the text of one email, obscured by a subject line of “I’m glad my teachers taught me this”)
  • The timing was off (after Christmas, typical retail logic = people have spent their money)
  • Our prospects/customers aren’t motivated by price or 10% promotions … or non-buyers claim price is a barrier but it’s really not (this one has a lot of possibilities and you should carefully think about this)
  • A combination of the above
  • Something totally different we didn’t even consider

Here’s the part of a GrowthLab post where we usually tie it up with a bow with lots of takeaways. But the ugly truth here is that business is messy. It’s not always entirely clear why something works or doesn’t work. And sometimes “test your assumptions” means those tests will fail. I wish I could point to one of those bullets as THE reason. But I can’t.

What’s even more confusing is that this is a strategy that can’t really be A/B tested. As I previously wrote on a Quora post about A/B tests:

You generally can’t A/B test strategy.

With really major changes like offering a new product or which product to offer — changes that can potentially provide HUGE ROI or cost you a lot — you can educate yourself with customer research, etc, but ultimately you have take a risk and make a decision.

Will we run a promotion again? I don’t know. If we do, we’ll take a fresh approach and build from the ground up.

The bigger lesson is that after 14 years of running this business, I still have a lot to learn. As your business gets more complex, there are more and more choices to make — and fewer and fewer exact formulas to follow.

I love my team’s willingness to experiment with new approaches, even radically new ones. And we’ll continue sharing our lessons learned — from shutting down a $2 million subscription product, how 1,000 customers make us $8.6 million in revenue, to why it’s important to rewrite your story — here at GrowthLab.

While I can’t pick out one of those bullet points as a lesson for our business, I do know my personal lesson: Even after 14 years of doing this, I still have a ton to learn. In fact, we all have a ton to learn, all the time. Despite what dozens of blog posts will tell you, sometimes there’s no way to know the exact reason something worked or didn’t work. There’s no fool-proof system.

Those messy truths are the kinds of things we love to write about here on GrowthLab — and I’m glad you’re along for the ride.

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There Are 54 Comments

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Hi Ramit,

I was in this list. I had wondered why you were offering a discount, but it didn’t factor in my decision not to buy.

It was actually because I had bought another course a few months before that, and was still making my way through that one. I wanted to give that course my full attention. So for me, the timing was off.

That doesn’t explain the mass drop-off, though. Sorry your campaign didn’t go as planned! I appreciate seeing posts like this because it lets me know even heavy hitters don’t get it right every time.

I love Endless Audience! I’m not building an information product at the moment (digging in to the course actually helped me realize I needed to pivot to a freelance/coaching model), but it helped me put my priorities in order when considering what to focus on when building a business. It continues to be a great reference point for me when I feel “stuck” and don’t know where to turn.

Hey Ramit

So glad you posted this article.

I got this email at the time and very nearly sent you an email back asking why you were discounting. I think I resisted typing at the time because it would seem strange for a potential customer to feel almost angry that you were giving money off.

I think the weird feeling I had was because you’d taught for ages NEVER to discount, and then you were doing the same. Was a bit fraud like… made me question does Ramit really have principles when you create loads of free content to create trust.

The best comparison I have is when I didn’t buy a course from doubleyourfreelancing because it seemed strange. Their tag line is “charge what you’re worth” yet they run a email funnel that offers a 33% discount at the end of it!

Anyway, very glad to read this article and see it was all an experiment. I think it’s right to shelve this idea but just a thought – if you did it again, I would have loved it if you had just written honestly in the email and had said straight up that you were testing your long held belief by offering a discount and would see the results.

Chris

It’s

Ramit Sethi

Thanks Chris. I really appreciate it. And that’s a very interesting idea. The longer I stay in business, the more and more I love when we (and other businesses) are radically transparent.

Hey Ramit

Thanks for the reply.

I’ll add a couple follow-up things I was thinking.

1. Don’t underestimate how much people trust and warm to people that have principled positions – even if they go against the grain. Have you noticed how a lot of principled politicians build a cult like following, like Ron Paul, Jeremy Corbyn etc? It’s because they seem authentic and stand up even when their principles are unpopular. If these people went against their principles they’d be vilified overnight.

2. I wanted to add to why I didn’t buy in the sale (and have still not bought any of your courses despite spending $1200 on one of your ZTL students courses recently).

For me it’s not price, it’s just timing. The time isn’t right yet – I’m focusing on my freelancing and I don’t want to start a business yet. I know that when I do (likely by the end of the year) that I’ll buy ZTL, until then I’ll sit on your list waiting until I’m ready.

3. My question to you – if someone says their reason for not buying is “price” – do you believe them?

I agree with Chris in terms of radical transparency…

It’s one of the things I love about the way that Colin Theriot sells his products in his Facebook group. It’s a different approach to you obviously (he uses a group instead of email marketin), but he’s always really upfront about what he’s offering and why.

Even though I know he’s selling, I literally LOVE reading his sales pitches! (And I purchased his bundle of courses).

My only thought in reading this is that having 10 courses to choose from is overwhelming. Like… which one do I want? I wasn’t part of the cohort, but it would have seemed unusual to be directed to choose from 10, when you normally go to such great lengths to “pre-sell” the value and idea of what you’re promoting before you actually pitch a course.

Either way, I’m glad to see this post.

I’d seen someone else write about the discount, and I’ve been looking forward to the analysis!

A 10% discount doesn’t move the needle much.

A yard sale (such as the sales page you showed in your post) is also a hurdle. Options, options, options. Broke a big rule of direct response…

A better discount to a single product, or to a product bundle, would likely produce superior results.

Thanks for sharing.
Bill

Hi Ramit,

I really appreciate you to be so transparent.

In this article you wrote you are not sure why peple did not buy. Back in December, I also red your end-of-year-discount offer.
I could imagine it was because there was no option to pay in monthly rates, I can just remeber the option to pay full.

Lukas

I wasn’t in the cohort, which is a shame, because I’ve had my eye on “How to talk to Anyone.” Oh well, I’ll get it eventually.
My guess is that a lot of people who complain about price won’t buy even if the discount is 50% or more. There’s a big mental barrier to buying your first course (I remember the panic when I bought FF a few years ago) and even with a big discount it’s hard to shake the idea that you’re “blowing money” on scams (and maybe the discount was doubly discouraging?). I get a steady stream of info product sales in my inbox and there are plenty I would never buy or wouldn’t avail myself of even if they were free. Part of it is the value proposition, and part is the fact that I simply don’t have the time or mental resources to take online courses every week, so I stick to what is most relevant for me.

Ramit Sethi

“My guess is that a lot of people who complain about price won’t buy even if the discount is 50% or more.”

I agree.

Possibly, for many who say price is an issue, it will still be a issue even at a discount. They may just not be able to afford it, even if you discount it 50%. (Which is different than being not interested. But still means that they may just not be your target audience.)

I remember seeing this email and wondering why you were discounting. I can’t remember exactly why I didn’t buy then but I do remember the 10% discount not being particularly appealing. I probably needed a good sales email guiding me along.

There were definitely a number of courses I was curious about but at that particular email moment in time, I wasn’t particularly interested. I think that email wasn’t compelling enough to motivate me to purchase. It wasn’t related to the discount, I just didn’t feel a particular urgency for any particular program.

Fascinating analysis. I immediately went to see if I received this email – and I did, but I hadn’t opened it. I had purchased ‘Teach Yourself Anything’ just a few days before, and didn’t open the next four emails after that. I didn’t expect to miss anything major just a week after a brand new course launch.

I agree with the above comments that being more transparent would have induced me to do so, however. Maybe if the email headline had been “I haven’t done this in eight years,” or even, “Happy Holidays, weirdos: here’s a discount.” Given that it was only 10% off, I wouldn’t feel gypped about courses I had already bought.

I also agree that the discount size being comparatively minor probably didn’t do much to convert people who wouldn’t buy at full price. I’ve purchased 5 or 6 non-premium courses over the years, but as much as I’d love to get one of the heavy hitters, I don’t have it in my budget yet to drop four figures at once. I should point out here: I know there is monthly pricing, but I loathe owing money, and I always pay for things in full. My only recurring costs are rent and utilities, and I like it that way. That could definitely be a ‘me’ thing, though, and not a larger trend.

And Cass seems pretty great.

Ramit Sethi

Interesting analysis and I appreciate it! I think your ideas are interesting but only real solid data will tell us if those would actually work.

Hey Ramit,

I notice that the promotion was for multiple courses, not one at a time like you usually do.

It may have confused people with too many choices that they ended up not caring anymore, especially when there wasn’t really any context as to why someone should buy Product X.

If you had done a promotion for just ONE of your courses, do you think it would have worked differently?

I’d rethink that answer to be honest. The reason I didn’t buy is because I clicked that link and it felt like spam. I was being tossed a bunch of options and just closed the page after being overwhelmed.

Larissa Fernandes

Maybe naming one of the problems “price” is the problem. It’s not so much “price” as it is “cost”. I believe that IWT courses are priced what they’re worth, but not everyone can afford the cost. If you take in consideration the fact that dollars are expensive, this may also say something about international customers like me. Anything I buy with dollars is almost 3x more expensive than if bought with Brazilian Real in Brazil (in my case and depending on the product/service). Also, in my case, I don’t like asking for refunds, so I’m afraid of buying a course, not liking it or getting any results and then having to take in the loss. I prefer to wait until the day I have the money to spend and not have to worry if I love the product or not. That’s me.

~~ I actually joined RBT once and then cancelled after about three weeks and you guys gave me a refund even though I didn’t ask for one – which makes me uneasy. =)

So, cost is a problem because maybe somepeople who need your courses can’t afford paying for them.

You know what would be a good idea? Maybe you already have this, but I’ve never seen it… A roadmap for launching business, freelancing, consulting, etc, using only free content. I sat down to put my finances in order and used about 4 IWT blog posts and an e-book (I think, I’m not sure) that I researched and found on the site to create my plan.

Ramit Sethi

I appreciate the comment. One of the decisions I made early on was to offer 98% of our material for free — and for 2% to be premium. I’d encourage you to use our free material to focus on savings for now. Many of our top customers used the material on GrowthLab and IWT.com to save and earn thousands. When the time is right, we’d love to see you in another one of our courses.

Great takeaways in here. Plus, you got validation on your earlier belief about discounts, so you don’t have to wonder anymore.

I was in that small cohort who received the discount email. I too wondered why you guys were backtracking on your “no discounts” rule, but I also wondered if everything was okay. I tend to see discounts when something’s wrong.

You make an interesting observation about people citing price as a common objection, and I can see why you wanted to test it. Personally, I’ve noticed a lot of people use price as a smokescreen for something they’re not going to do anyway, for a variety of reasons that often have little do with price.

I recently joined “Behind the Sales Page”, and I didn’t even think of the price at first. It was a nice plus, because $300 is a ridiculously reasonable price to virtually sit with a CEO for a few hours and watch him deconstruct a $600K sales letter, but I would’ve paid a lot more for it. The reason I joined in the first place (as I told Michell this week in Philly) was because BtSP arrived at the right time when a) I needed it and b) I was confident I’d actually do it.

I agree with this, I was on a cruise in the Carribean (where I got my first PayPal notice of $$ coming in while I was litterally on the beach – amazing!) while the door was open and it was closed when I got home. I’ll buy it next time, I need that info! : ) <3

Thank you for this post and the amazing transparency. Personally, I believe this boils down to not enough discount (10% is too low) vs. “who will recognize the value and buy everything we offer after the initial purchase.”

There is an optimal discount value that gets you the repeat buyer as well. Not sure where that number is or if there needs to be a “run-up” series to the event (i.e. something really special is coming) to a very specific segment, just like all the other sales emails. In other words, maybe you need to cater to the frugalistas the same way you do to the general audience. The frugalistas are different.

Hey Ramit-

Thanks for the transparency, as always. Seeing this post and your thinking behind making the calls was extremely helpful. I received those emails and I know I for sure thought “damn, I paid full price for ZTL and Ramit has always been really proud about not offering discounts, this is really strange”…

Also really awesome that you shared your average open and CTR… do you have data on how many people reply to your emails?

I love getting your emails that ask to weigh in on a topic, and have always wanted to know what the response rate is on those.

Thanks for everything as always!

Ramit Sethi

Thanks!

We have some data on replies, but in cases like email replies, we value qualitative feedback more than quantitative feedback.

Chris Rudram

I remember the offer. 10% didn’t create any incentive to buy at that time. I’ve been curious, but never found a course that appealed 100% to me and my needs, and with the price points you offer at, these aren’t ‘I’ll just see’ offers… there needs to be a full buy in to use them. Saving $200 on $2000 course doesn’t really cure any price objection. It only helps if I was wavering close to buying right then.

For me at least.

As 98% of the content is free, I’ll keep mooching.

Thanks for your transparency, as always. I saw the email but 10% wasn’t enough to create an incentive for me to buy. It wasn’t just about the price though – I didn’t feel strong pull to do another course at this stage – still going through your (great) copywriting course and focusing on a few other things outside of my business.

If there was a course I was really interested in, and the discount was at least 30%, this would definitely make me buy.

As I wrote you once, I would really appreciate a good discount on any of your courses because I’m over 65… and live on a very tight budget.

However, I did not receive your email and if I would and got inside I guess the price would still have been too high for me.

Perhaps I am just not your ideal client.

You should know that old or not, poor or not some people like me still want to learn things and have a better life.

JAMES MULVEY

Ramit,

I think you interpreted this lesson wrong.

The reason why your discount didn’t work is because the offer is weak. Everyone—even your best customers—like discounts. And a stronger offer would have pushed more people over the fence.

Discounts damage your brand and train customers to wait for deals.

But if a one-time discount flopped, I’d say the data would point to a weak and uncompelling offer.

If your local BMW dealer had a 50% sale, they have a flood of realtors buying new cars. If they did it every week, the brand would damage and people would stop paying attention.

If you had a strong offer and clear reason for the discount (such as “we’re updating this course right now, so buy the old version at half-price”), you’d sell.

But as my old boss said, “even a successful coupon is unsuccessful.”

I don’t remember if I got this one or not. I wonder how much of an effect the “single email” had versus the discount, though.

Usually your launches have a series of emails, poking and prodding the pain, talking up the dream, and finally offering the course for sale. This one was a solid email but only just one. I’ve gotta imagine the number of people who are willing and ready to spend multiple hundreds (even thousands) on a course at the drop of a hat is small, even with a discount.

I remember hearing a story from Amy Hoy where she launched her 30×500 class with a single email, made 1 sale, and then scrapped it. A week later she started fresh with her normal multi-email launch sequence and sold every spot in the class.

Thanks for always being willing to put these messy truths out there! It’s great to see behind the scenes of a successful biz.

Thank you for sharing your results and insight from this test.

It may be that several factors have played into this experiment not working. I would suggest that the timing was off (after Christmas when money had already been spent or people weren’t paying as much attention). Another thought is that the discount wasn’t enough to entice people to cross the line. Thirdly, since you went against your hard core customer’s expectations that you never discount perhaps this cast doubt in them instead of leading them to take action. One last thought, you hid the offer in the message, so some might not have seen it. I personally don’t read all of your emails.

If you ever want to try to discount again, I would suggest you try it when people are looking to spend money and have the mentality that discounts might be offered – perhaps on Black Friday or Cyber Monday when customers who have wanted to get your course would be more willing to treat themselves to a holiday gift (gift giving is already on the mind at this time). It would also be expected to only be a one day opportunity (call to action) and might help get people off the fence. Also, since you never discount, even a small discount would feel like a true gift – market it as a thankful after Thanksgiving moment. Just a few of my thoughts.

Again, thanks for sharing so much information over the years.

I got this email and I bought ZTL. I was actually debating whether or not to buy ZTL for a while. I did think it was weird but also awesomely rare that a discount was being offered. I was pretty sure this would never happen again.

For me personally, it was more a mindset issue than anything. I didn’t think I would be successful and that I would just be wasting $2K, not because the material wouldn’t be helpful but more due to my own limiting beliefs. When I saw the email, I figured I would just take the leap (even though I probably bought at the 11th hour). It was a mental block for me, not a financial one.

If I’m truly going to invest in myself, price won’t be the deciding factor. I do appreciate saving $200 though.

I got your discount email too. I’ve been interested in your Dream Job course for a while, so I definitely clicked the email and looked at the sales page. And I’ve bought two of your other (admittedly less expensive) courses in the past, so it’s not like I’m not a willing customer.

There were two factors that made it a bad choice for me. Like you mentioned, it was right after the holidays and I wasn’t eager to spend that much money right then. Plus, it didn’t feel like much of a discount on an already very expensive course. It would have had to be a much bigger discount for me to say “I have to buy this right now!”

Yes, I received this email – I did click through – and what I saw was an offer for courses I already own. 8 of the 10 offered to be exact. That’s a pretty significant data issue from my point of view and has the potential to utterly distort the meaning of your metrics. I mean, the main issue I see is that I wasn’t culled from the ‘haven’t purchased’ group when I should have been. Therefore how many people were emailed who actually aren’t just looky lous? It might be worth a DB audit to see if I’m the outlier in this test, or if a significant number of people who are already students also received the discount offer for products they already own. If few, your conclusions stand. If it’s a bunch, you may have a different issue biting you in the discount.

I was one of the people that received your email. I agree with Dave Ceddia’s comment:
“I’ve gotta imagine the number of people who are willing and ready to spend multiple hundreds (even thousands) on a course at the drop of a hat is small, even with a discount.”
For me, it isn’t so much the money as the time and personal readiness. I was considering Earn 1k after benefitting greatly from your free content. Then, that free content helped launch me into a solid, higher-level position (early Dream Job content, Thanks!). I have been busy with the job, learning all I can since then. What I would want to do as a side business has changed…and still is evolving as I grown professionally within my current organization. So, while a discount is nice, I wouldn’t buy a quality product such as yours until I am at a point when I can make the most of it.

Hey Ramit, great post as always.

I was in the test as well, and honestly 10% just did nothing for me. I remember looking at it going, am I ready to take on this course right now, no, I’m still working on this project and when I’m ready the 10% won’t matter. So why put it on my plate just to save the 10% and take my focus somewhere else.

I try and do several courses a year and read a minimum on 12 books a year(fiction.non-fiction mix) So I grab them when I’m ready for a specific topic I’m working on.

Thanks for giving us this break down, super helpful!

Ramit,
I have had a long hybrid autoresponder funnel (100+ emails) and use both full price and 40% to 50% discount sale offers – evergreen sales.
They pretty much sell one product. 3% buy full price within first 10 days and 7 emails ($59 to $89 product + upsells, in golf niche, digital products; not a IWTR cash cow but ok for a solopreneur). Then a further 1.5% convert after first sale two weeks in then a further 1.5% in another 2 weeks when another sale happens. The conversion rate over a couple of years ends up at 10%.
I view it like the Airplane seat pricing and Pareto Princople, First class, Business, Economy) 1% buy right away, 2% within first 10 days through 7 emails at premium price; 1.5% will take the sale price right away and then another 5% will buy at sale price
over time). There are two other funnels that follow the same process, 1 product, 1 topic, 40% plus limited time offer, plus 3 options (cross sells) on purchase page after sales page). Then upsell at 50% on one product (20% CV rate).

One key point is that the emails continue to be about one product. The message, trust and virtuous cycle grows over time.

Points that stood out in your test failure were: 8 products! You can’t have a strong sales message and content pertaining to one product and reason why to buy on 8 products.
-Just a couple of emails only, need more than that.
– Discount: 10% on a digital product…oooohhh…you got me hot and bothered now you maniac! 10%…WTF! Get some skin in the game…make it hurt (the discount)…You put thousands of dollars and man hours into production and then you give it away price that you feel uncomfortable with…that’s when you know its a serious discount (and customers do too). (Best selling authors do this all the time; 3 years writing a book then available for $14.95. ..that hursts!)

If you were to try again Id use greater targeting (because there is so many products) with one subject over a 7 to 14 day sale period and then back to regular content and then back to sale offer, repeat repeat…deliver valuable content that gets them on the fence then throw in the crazy discount and they’ll buy bigtime!

Of course as you have pointed out above, a substantial percentage – your best customers as you have pointed out – will buy everything you have at a premium, they are never part of a sale offer – only those who need more persuasion.

Cheers
Anthony

I think the problem was you tried to hide the discount. You should have owned it, and in the subject line said “for the first time ever we are giving a discount on the following courses” or something. the subject line you used in the email is like completely unrelated.

I find it curious that you never followed up with a survey to ask WHY people didn’t buy. Very unlike you to make assumptions!

I received the email and was seriously considering buying ZTL (as I had so many times before). Apart from being not *quite* ready, my main reason for not jumping right in was that the exchange rate at the time basically invalidated the discount. I knew I’d calculated it to work out cheaper previously, so I knew I wasn’t missing anything.

Fast forward a few months, the exchange rate was looking a little better, I was more prepared to spend the time on it, and I happily bought ZTL at full price – which after currency conversion worked out to be much the same as the discounted offer.

You offered readers a choice of a whole bunch of products – all with discounts – but no reason to choose one over the other.
The confused mind says no to all options. I think you’d get a different result if you sent just one offer with a discount to people who’d already shown interest in that product.
However, as you’ve said before, discounting ‘just because’ is a bad strategy, cheapens your brand, and discourages repeat buyers.

Too many assumptions in the analysis. My two cents: 1. The email wasn’t interesting. I read through a large % of the emails you send but this one didn’t motivate me to keep reading.
2. 10% is not a compelling discount. It’s a sort of non-discount. Anyone who can afford to pay $1800 can also afford to pay $2000. If they were already planning to buy they might be delighted to save 10%. But i can’t imagine many people being swayed to this type of product by 10% off. Saying “even at 50% i doubt they would have bought” is a complete cop-out. You’re changing tiers at that point, and that makes a difference.

Ramit,

I remember opening that email and reading it through.

Here’s why I didn’t buy:

(1) The fact that you were offering a discount threw me off guard. I remembered all of the times you said you didn’t do discounts, etc. It literally made me stop and pause for a few seconds.

(2) I’ve purchased several premium IWT courses throughout the years and am more than willing to pay for massive value. But as I clicked into the “Special Offer” sales page… I was extremely *underwhelmed*.

The way the offer was structured, “Save $100”, “Save $150″… it was a weak offer, to be blunt. I knew your courses are usually priced at the $1k+ mark, so $100 off was an immediate turn-off.

Honestly.. even if it was 50% off I probably wouldn’t have bought. I purchased all of the material I truly needed @ full price – wasn’t going to dish out a purchase for something I “might” need in the future. No immediate problem to solve with the discounted material.

Just trying to dig back into my thoughts that day – thanks for the breakdown article! – Dan

Hey Ramit,

Interesting post. How comes you didn’t send a non-buyer survey to find out why?

I remember the discount, but I honestly don’t remember if I purchased or not. I have a couple of your courses still sitting in my to-do list in my inbox, and I already own most of the ones offered in the discount.

I remember this, I got an email offering the discount (probably because I have DJ, E1K, and a few other courses). And I also thought it was odd that you were offering a discount when you’ve spoken against it so much. But it definitely did NOT feel like a cash grab (like some other online entrepreneurs) – so that’s good.

Do you think it’s possible that the sales pages (or email/webinar/etc funnels) do the majority of convincing people to buy? And maybe when you take away the sales pages and add a time gap, then people have forgotten they really wanted to buy but it was “just a little too pricey. ” So then the discount without the sales page isn’t enough to convince someone “on the fence.” I wonder if that could be the case.

Hi Ramit,

I was in on that list, I even remember the email plus thinking to myself: “What? A discount? That is strange…”
About a month before that I had gotten into Call to Action right after launching a product with Zero to launch, and that prevented me from joining any other course but… I didn’t even check the courses though… I read through and then said bye-bye…
It felt a bit like a scam–please don’t take this the wrong way, I fully trust you. But it just felt that it wasn’t you or IWT, that it was somebody else writing this email… Then I saw one of the readers reacting with that comment you posted here, and I thought to myself: “Yeah! Lets see how this plays out”

Soooo, to bring a bit of optimism to this reply, after reading your response to that comment–we can’t see in the picture here– which was something like: “you will soon find out” I thought to myself: “Oh! This is a test…Of course! Ok! I get it now, I just need to wait and see what happens”

Bottom line, we all learn from you and along with you. Through your emails, courses and tests, but to learn, we have to, as you say yourself, trust the system, do our work and be patient! 😉

Thank you,

Wow – I wrote you a whole e-mail and ended up not sending it because I figured you were testing something. I definitely wanted to take advantage of the discount because I knew you’d probably never do another one again but I couldn’t justify the spend since I blew my budget on Christmas gifts. Though I was seriously tempted to… I sat down and looked at the $100 discount for Earn1k — This would take me less than 1 day to earn back at my hourly job so I don’t have to jump on this TODAY. I can buy it at the full price and it would be a better timing for me.

A lot of great considerations offered by other folks and here is one that might help, Ramit:

What was going on in the macro environment and lives of your subscribers at the time of these emailed offers?

I have found that the larger context affects my sales. Is politics focusing people’s attention elsewhere? Are there influences taking place in the lives of your subscribers that simply don’t have anything to do with taking action on their business goals at that point? Just as nursing homes put more staff on during full moons, Tuesdays are the best time to book flights at a cheap price, and people are focusing on the gym in January as part of their new year resolutions, perhaps there are richer reasons the timing of your offer simply didn’t connect with what was occupying subscriber attention at that time. The “I don’t have money after Xmas” argument can be a conveniently understandable reason that may actually be overshadowing other, more significant timing and context influences.

In real estate success is defined by location, location, location. In marketing success comes from deeply understanding customer context, context, context.

This was great, thank you for sharing Ramit. Really enjoying the emails lately! Also, this one helps me stay committed to not offering discounts on my two info products as they launch this year. Thank you!!

PS. Love getting the inside scoop on this stuff, keep it coming!

Hi Ramit,
thank you for sharing backstage preps. Just a few words from me – I am on your list for several years and bought 3 of your courses. Maybe I would have bought another one, but I missed that email. If you ask for hypothetical reasons for non-buying I would name three of them:
1. Title of the email – as I do not have time to read your long emails, I read only those with catchy title. That one was not catchy (for me).
2. Timing
3. 10% of discount does not make big difference – I live in Poland and with the bargin power of Polish zlotych your courses are very expensive. 50% is a deal you cannot resist.

So in my opinion your promo action could not succeed. Just your mindset made it unattractive for clients;-)

Great article, Ramit. I occasionally get asked if we offer discounts, and aside from an incentive for clients to pay up front (about 10%).

My reasoning was always that if someone can’t afford to pay us $20k for our services, they probably won’t be able to afford $15k-$18k. We also don’t have an offering that lends itself to repeat purchases, so it’s not worth cutting into our bottom line when we aren’t likely to make it back in future.

Cleo eleftheriades

Hello Ramit.
I was apparently one of the few who did buy a course in this occasion.
Here’s why:
For the first time ever, I got a clear overview of the available courses; on which I had zero visibility up to that point.

As simple as that.
I had never seen it all laid out so clearly.
I was triggered by “Success Triggers” immediatley.
I would have bought it no matter the price.

In the past you didn’t have an overview of your offer in either IWT or Growth Lab.
Now you do.

My take: We all go through so many struggles (time, commitment, accountability, inner psychology) before buying a course, that by the time we “buy-in”, the price has become irrelevant.

So, that’s me.

PS:
1-This post is the true artistry of writting a postmortem.
2-Yes, your customers don’t love discounts and want to pay full prices!!

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