Retail businesses have often used discounts to entice customers to purchase goods. The same is true for many other sectors of commerce that range from restaurants to ride-shares. By giving consumers something at a lower cost, they usually see the offer as being higher value. That’s why any discount tends to attract customers and increase sales. And if enough customers are convinced, then the company will have a better bottom line, making the discount worthwhile. At the end of the day, it’s all about math and whether a shift in purchasing volume justifies the discount provided. From this perspective, many companies offer discounts periodically to boost their products and services.
But offering goods at lower prices have some pretty serious negatives. For one, discounts tend to weaken brand image. When an item is offered at lower prices often enough, customers may begin to see a brand as lower quality. Discounts also change consumer expectations over time, persuading them that the regular price is actually too high. For these reasons, companies are beginning to adopt new approaches that match price reductions with charity and giving. Termed “donation discounts,” businesses are finding these can be a great way to drive traffic to their goods. And there’s a few companies that are making it easier than ever to achieve this.
“Discounting is a well-worn marketing muscle, but it’s detrimental to the brand, margins and customer expectations.” – TJ Mahony, Partner at Accomplice
Charity and Giving Back Platforms
Donation discounts have been around for some time as well. Many companies have leveraged charity and giving back in an effort to increase customer appeal. Toms, the shoe company, donates a third of its profits toward needy causes. Warby Parker, maker of eyeglasses, donates a pair of glasses to someone in need for every pair sold. But the increase in donation discounts today is more about e-commerce, especially since the pandemic. During the first half of 2020, charitable donations increased over 7 percent. Thus, creating opportunities for charity and giving back online seems like a great situation for e-commerce sites.
Givz was founded in 2017 with this exact concept in mind. The New York startup only employs 8 individuals, but it’s been making quite the impact since its launch. In fact, the company just received $3 million in seed funding from a number of investors. A big reason for this has been Givz’s growth over the last year. In making a shift from B2C to B2B, the company enabled donation discounts to over 1,100 charities. This resulted in a grand total of over $1 million in customer donations, with the vast majority being small ones. By making it easy for customers to give their discounts to their charity of choice, both companies and consumers win. And of course, Givz also benefits along the way.
“We are creating a new marketing category and generating the largest sustainable charitable giving platform in the process… I believe that using personalized donations to incentivize consumer behavior has endless application across industries, verticals and continents.” – Andrew Forman, CEO and Founder, Givz
The Appeal of Donation Discounts
Everyone appreciates attaining something they need or want at a lower price. But when a discount can be donated to a charitable cause, it has additional social value. The positive feelings that charity and giving back generates may be intangible, but they’re certainly real. When companies are able to provide us with these types of opportunities, we also tend to value them more. This naturally boosts brand loyalty and social responsibility image. (Read more about the social responsibilities businesses should shoulder to transform society in this Bold story.) And in many instances, persuade us to make a purchase we might not otherwise make. This is why donation discounts are quickly replacing traditional discounts in many company’s marketing efforts.
For some companies, leveraging donation discounts to increase sales have been quite rewarding. Tervis, for example, offered to donate $15 to any charity of choice for every $50 consumers spent. This strategy resulted in a 20% increase in website sales conversions and a 17% increase in average order values. But research shows that a bigger discount for donation does not always result in more consumer purchases. Smaller donation discounts tend to promote the greatest amount of charity and giving back. Because smaller discounts have a greater impact of positive self-image, these tend to drive more sales. Larger discounts, because they’re seen more as company donations, are less likely to be as appealing to the average customer.
“We believe Givz’s donation-driven marketing platform offers brands the best way to attract the socially conscious consumer while elevating their brand, moving more inventory and driving increased order value rather than simplistic traditional discounting.” – Vic Singh, Partner at Eniac
Streamlining Charity and Giving Back Online
For several years, online charity funding sites have become increasingly popular. Crowdfunding platforms for nonprofits like Fundly, Salsa, and Bonfire attract many organizations and customers each year. But newer platforms that enable donation discounts broaden this potential to every possible online transaction. This is certainly true as the Come-to-Me Economy expands. (Read more about the Come-to-Me Economy and its impact on the world in this Bold story.) For example, Givz plans to focus on expanding its growth through Shopify retailers, which now total over 1.7 million. If successful, charity and giving back could become a routine marketing approach for the vast majority of e-commerce sites. Social responsibility would simply become the norm that consumers come to expect.
Certainly, the retail sector will be among the first to feel the effects of donation discounts and related trends. In fact, most online companies are already trying to leverage charity and giving back to increase sales and reputation. But soon, expect to see donation discounts in many other industries. Givz specifically is hoping to branch out into the restaurant industry and gaming sectors in the future. The bottom line is that charity and giving back are inherently appealing to consumers. And when they control which charities receive their donation discounts, they’re increasingly likely to regularly patronize a company. Platforms like Givz simply streamline the process, placing charity and giving back in the palm of consumers’ hands.
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