The current economic environment means that discounts are everywhere but it’s not always a good thing.
At least not for the small business owners.
It used to be that only high-priced ticket items were shopped. Now, consumers want to shop everything from toilet tissue all the way up to mortgages. If you’re selling to consumers, there’s more pressure than ever to discount your prices. While this can work well in limited circumstances, it is not a sustainable long-term strategy for your business because it diminishes your brand. Keep at this strategy and you’ll never again be able to sell your wares full price.
Don’t get caught in the endless no-win, price comparison, and one-upping cycle.
Follow these easy-to-implement, affordable steps so you’ll never have to give it all away:
Keep a customer list — By creating marketing around your existing customers, you won’t have to continually acquire new ones. Because Acquisition can be up to 10x more expensive than Retention you’ll want to focus on Retention marketing. Then, use Acquisition to keep your pipeline active as necessary.
Strategically offer promotions — There’s nothing wrong with using this strategy as a reward, but NEVER use it as a punishment. For example, including the words “for new customers only” anywhere in a promotion is suicidal. Why? How do you think a loyal customer feels when they see your mass-circulation ad that favors a newcomer rather than them? (And, they will see it.) Me? I cringe when I see companies make this mistake. If I’ve been a loyal customer of yours then why aren’t you rewarding ME? Try creating a rewards program or create a communication plan to stay in touch with your existing customers.
Deliver Killer Service — According to a survey done by American Express, 59% of consumers will try a new brand or company to get a better customer experience. The best way I know to overcome tire-kickers and price-shoppers is to become the preferred supplier. And, since the best way also happens to also be the easiest and least expensive competitive edge there is, I’m always stunned when it doesn’t happen. Have great customer services policies in place, hire friendly employees and train them well, know your customers’ names, be flexible, and don’t act like a bureaucrat because you think that makes you look bigger. When I hear a small, neighborhood business say something ridiculous that includes the words “our policy” I cringe and walk away — usually for good.
Sell Off Only Excess Inventory — Used in this way, you can cut losses on otherwise unsellable merchandise. Here’s what I mean: A former client would sell current inventory on Amazon at deeply discounted prices. This led to consumers buying from there, rather than his own site, or in his retail store. When you do that, you’re undermining your store/site’s success so much so that no amount of SEO spending can ever be profitable.
If you must discount for some reason, then category exclusivity is the best strategy — Here’s what I mean: The other day I opened up a discount seller’s email promo and to my horror, I saw a former client of mine giving a deep discount. Even more horrifying was that her ad was just below a direct competitor’s ad offering an even deeper discount. Oh my. If you’re going to discount your services, then you must ask for category exclusivity. If you don’t get it, you risk similar large-scale digital humiliation.
These are just a few of the many ways to go about building and marketing a successful business built on delivering great customer experiences.
Sales and discounts have their place, for sure. But discounting is not your only option — keep in mind the long-term repercussions and consumer perception of your business.
Don’t become the Bed Bath & Beyond of your industry. Have you ever seen anyone make a purchase without a 20% off coupon in their hand?
Because once your buyers become trained to purchase from you only when there’s a sale or incentive of some kind, you’ve lost the ability to sell for full price.