In the race to win customers, many businesses reach for the easiest lever available: discounts.

And at first, it works. More foot traffic. Higher click-through rates. Bigger baskets.

But over time, a dangerous pattern emerges: customers stop buying unless there’s a deal. Margins shrink. Brand loyalty disappears. And eventually, the business goes silent.

This isn’t just a small business problem. Major national retailers have made the same mistake, and paid the price.

At Indian Lakes Marketing, we help businesses avoid the discount trap and build long-term growth based on value, not desperation.

Let’s break down why over-discounting can destroy your brand from the inside out, and what you should do instead.

Discounting: A Short-Term Win With Long-Term Consequences

There’s nothing inherently wrong with discounts. Strategic promotions can:

Move seasonal inventory
Drive urgency during slow periods
Attract new customers

But when discounts become your default strategy, you condition your customers to wait for the sale, and they stop valuing your full-price offer.

Real-World Examples: Big Brands That Discounted Themselves to Death

Bed Bath & Beyond

For years, 20% off coupons were their identity. They trained an entire generation of shoppers to never buy full price. Eventually, even 20% wasn’t enough.

As competitors like Amazon and Target added convenience, selection, and loyalty perks, Bed Bath & Beyond was stuck in a price race they couldn’t win. In 2023, they filed for bankruptcy.

Takeaway: When discounting becomes your brand, you have no pricing power, and no loyalty.

Macy’s

Macy’s went from being an aspirational department store to a clearance outlet with ever-present sales, red tags, and doorbusters.

Customers began to see full prices as inflated and stopped trusting the brand. Even with iconic history and nationwide reach, Macy’s has closed dozens of stores and lost ground to more focused retailers.

Takeaway: A premium brand loses its identity when it's always on sale.

Payless ShoeSource

Payless made the mistake of tying brand identity solely to affordability. While they captured price-sensitive shoppers, they struggled to differentiate and retain customers.

In 2019, they closed all U.S. stores.

Takeaway: If price is your only value proposition, you're replaceable.

The Psychological Impact: What Discounts Teach Your Customers

Over-discounting conditions customer behavior in damaging ways:

It tells them your full price isn’t real.
It creates deal-hunters, not brand advocates.
It undermines loyalty. Customers don’t come back because they love your product. They come back because they’re waiting for the next deal.
It trains price sensitivity. Any competitor offering a better deal can steal them away.

In short, you build a customer base that only values you when you're cheaper, not better.

Retention Drops When Loyalty Isn’t Built on Value

One of the strongest predictors of long-term success is customer retention. But discount-driven businesses often see low repeat rates, because:

There’s no emotional connection
There’s no reason to return without another coupon
The brand becomes a commodity

When customers don’t trust your pricing, they don’t trust your brand. And when that happens, they leave.

What to Do Instead: Building Brand Value That Retains Customers

1. Use Discounts Sparingly and Strategically

Tie them to first-time buyer offers, loyalty milestones, or clearance events, not your core offer.
Limit their frequency and scope so they feel special.

2. Lead With Value, Not Price

Make your product or service so good that customers are willing to pay full price.

Highlight your unique expertise, quality, or results
Offer experiences, not just products
Build trust through storytelling, not markdowns

3. Focus on Relationship Marketing

Loyalty doesn’t come from low prices. It comes from connection.

Personalized emails
VIP programs
Early access for repeat customers
Post-purchase follow-up

The more you nurture the relationship, the less price becomes the reason they buy.

4. Use Pricing Psychology

Sometimes the problem isn’t your pricing; it’s how you present it.

Anchor your pricing by showing comparisons
Bundle services or products to increase perceived value
Offer tiered options to guide customers toward premium choices

You don’t have to lower prices to make sales. You have to position your offer more effectively.

5 Brands That Do Discounting Right

Discounting doesn’t have to destroy your brand, if it’s used with strategy. Here are 5 brands that offer deals without devaluing themselves:

Sephora

Sephora ties discounts to its loyalty program:

Annual tier-based sales for Beauty Insiders
Early access and exclusivity drive urgency
Lesson: Make discounts feel like a reward, not a routine.

Nike

Nike rarely discounts core products. Instead, they offer:

Select markdowns on past-season items

Outlets and app-exclusive offers for inventory control
Lesson: Protect your premium image. Discount selectively and with purpose.

Costco

Rather than flashy sales, Costco builds value into its pricing:

Everyday low prices
Trust in consistent savings via membership
Lesson: Consistency beats chaos. Customers feel like they’re always getting a deal.

Nordstrom

Nordstrom separates discounting from its main brand:

Full-price store rarely discounts
Nordstrom Rack handles markdowns and off-price
Lesson: Keep your premium brand clean. Let separate channels handle the bargains.

Patagonia

Patagonia barely discounts, and when they do, it aligns with their values:

“Worn Wear” for recycled gear
Occasional end-of-season sales
Lesson: Stick to your mission. Discounting shouldn’t undercut your identity.

Final Thoughts: Don’t Let Discounts Define You

Price will always matter. But when your business becomes dependent on promotions, you’re building on a foundation of sand.

If your goal is sustainable, long-term growth, especially in a competitive, margin-sensitive industry, you need to build around trust, differentiation, and retention.

That’s how great brands are built.

Ready to Break the Discount Cycle?

At Indian Lakes Marketing, we help local businesses build smarter marketing strategies that attract the right customers, increase loyalty, and grow without eroding margins.

If you’re tired of giving away your value, we’re here to help. Schedule a Free Strategy Session