A loan against next month

A discount is a loan. The volume arrives now and the repayment is due next month, and nobody in the meeting where it was approved will be in the meeting where it is paid.

Here is the mechanism, because it hides well. You cut the price for a week. Sales rise. Most of that rise is not new demand; it is demand that was going to arrive anyway, in the following weeks, at full price, and has been pulled forward to arrive now at a discount. The chart for the promotion week looks like a win. The chart for the four weeks after it looks like a soft patch, and the soft patch gets its own explanation: seasonality, a competitor, the weather.

It is not the weather. It is the repayment.

There is interest on it, too. The customer who bought at thirty per cent off has learned something about you, and what they learned is that the full price is a suggestion. They will wait for the next one. Some of them will only ever buy at the next one. A brand that runs enough of these has trained its whole customer base to shop from the calendar, and from then on every full-price week is a week they are waiting through.

I have watched this from three seats: the agency that built the promotion, the brand that ran it, and the platform that showed the topline going up and the twelve-week line going nowhere. From every seat the promotion week is the loud one and the repayment is quiet, which is exactly why it keeps getting approved.

None of this makes discounts wrong. Sometimes you need the cash this week and you know what it costs. That is a loan you took on purpose.

The problem is the loan nobody knows they took, and the next campaign that pays it back.