Simply offering customers discounts to incentivise the purchase of your products or services is madness.
Think about it. When you discount by 20% that’s 20% straight off your bottom line, 20% of your profits you’ve just given away – stop it!
It smacks of desperation, lacks any imagination or creativity and has little or no real impact – other than the negative one on your bank balance – stop it!
Of course people will take the discount if it’s on offer — but is that why they bought from you? In most cases I doubt it.
If you’re a “pile em high sell em cheap” kind of mass merchant operation… then maybe it’s what you’re known for, maybe it’s what differentiates you in your market.
In reality all it actually means is they’re just spending less with you. There’s no loyalty being built. All these customers will do is price check you every single time – it’s their thing. The moment someone offers them a deeper discount you won’t see them for dust – they’re gone, no loyalty.
Discounts are all around us and as consumers we’ve become conditioned not to purchase unless we’re getting a great deal. But a great deal and a discount are completely different things.
Have you ever gone into any of the high street coffee shops and ordered a cappuccino and a muffin and asked for a discount? Probably not and yet they’re up against stiff competition.
Instead, they’ll offer loyalty cards – buy 10 and the next one’s on the house… they become our coffee shop of choice, part of our lifestyle. We like the ambiance, the staff… the culture, we feel a sense of loyalty – OK, some of you think I’ve lost the plot – we’re talking coffee and a muffin here… But you have the ability to create brand loyalty too.
Do you offer a customer loyalty program? One that offers added value for valued clients – not just deeper discounts? A program that shows you know and understand your clients needs and wants?
What repeat business could you secure through such a loyalty program? Once you’ve spent time effort and money getting a new client – you want to keep them coming back time after time for consumables or additional purchases – so show them you care and understand them – reward their loyalty, remove the hassle and make it easy for them to keep coming back for more .
Restaurants may have a special item on the menu – “bundled” as a “meal deal”, they add value and increase the sale… What could you “bundle”, what could be your “meal deal”? This is an increased sales, albeit with one item at a reduced margin – but this is incremental business not discounting.
Bundling products could be an excellent way to turn slow moving stock – but it must add value for the client not just help with your stock clearance.
If you’re offering a quality product or service discounting should make you feel uncomfortable, not just by the potential profits you’ll be haemorrhaging, but more so because of how it devalues what you have on offer.
Instead of discounting take a look at how you can add value to any purchase, creating what marketing people call a “value proposition”. The cost versus the benefits received…
The next time you feel the need to offer a discount to entice someone to buy or just to nudge them over the line and clinch the deal consider adding value instead.