Thinking About Discounts #3

Today we are going to re-visit the question - Do I need to discount my products or services. Throughout the week we've posed a few more questions in this blog.

Now we want to wrap this up and make it simple. Do you need to discount?

1. Are you trying to move product off your shelves quickly?
2. Do you need a temporary way to bring in customers?
3. Are you trying to bring in a new customer base?
4. Do you have enough margin to discount your services and stiff make a profit?
5. Do you rely on customer referrals?


If you answered "Yes" to any of these questions than the next step is to consider a discount based on which question you answered "Yes." After creating a discount, be sure to carefully track the customers who use it to ensure your success.

For any other questions or help, feel free to contact us.

Thinking About Discounts #2

The point of discounts, as with any form of advertising is to entice customers to use your service or shop at your business.
Sometimes offering a discount to new customers allows them to try your service or products for a lower price. If customers like the service or product enough, they will happily come back to your business again and again. An even better outcome is that they will tell their friends about it!

Discounts can be given for multiple reasons. For instance, there are discounts for signing up for an e-mail list, for being a new customers, for spending a certain amount of money, for having a birthday, for buying products from last season. There are multiple methods of discounting and each one will bring in a different customer base.

If you are already comfortable with your customer level and you just want them to shop more frequently, discounts offer them a reason to return. I rarely shop at a grocery store across town, because I have plenty of stores to choose from on my side of town. Occasionally, the grocery store across town offers a discount that I just can't pass up, so I travel that much further to pick up those items. I'll also do the rest of my grocery shopping while I'm over there for convenience. This is a discount to bring in an already existing customer base.

Some businesses need new customers. While living at a set of apartments, I encouraged one of my friends to rent in the same complex. When she did rent, I received a discount on my rent and she received a discount on her first month's rent. This referral discount brought in a new customer, while also rewarding an existing customer. This kind of discount encourages word-of-mouth advertising.

When you decide to use a discount, take a minute to think about the purpose of that discount. If your goal is to bring in new customers, reward the customers you already have or sell off a product more quickly, you'll have different discounts available to each category.

Coupons! Coupons?! Coupons?

Are you a "Coupons!, Coupons?! or Coupons?" kind of business?

The Coupons! business can't get enough. Every day they design new discounts and at night they dream of better deals. Their customers are bombarded with coupons - every time you turn around there is a new e-mail with the latest sales and your mailbox is stuffed with little pieces of paper promising to save you. The problem with this style of couponing? Well, if the customer really needs something they will never pay full price. In fact, the customer probably wouldn't pay full price, even if you stopped couponing because the damage done to the brand would be irreversible - no one would think you were worth full-price anymore. Take the craft store, Micheal's, for example - most savvy shoppers know that the 50% off coupon comes along almost every week in the newspaper. These people wouldn't dream of spending $29.95 on that paint set when they could wait for a few days and pay half as much. It doesn't do much for Micheal's brand name - they are just another discount craft store.

The Coupons? business can't even imagine giving a coupon. This business is too good to lower itself to give customers a good deal - ever. They have a brand that is outside the realm of couponing and you're probably going to pay more for their products too. MAC makeup is like this. They don't coupon or have sales or discounts. They just don't. Apple is another company that doesn't offer discounts and they don't have to - people are still buying. If you're this kind of company, though, consider how hard the down economy has been on people. If there was ever a time to discount, now might be that time.

Finally, the Coupons?! business tries to strike a nice balance between the two. Couponing all of the time de-values a company. Most businesses (Not All!) don't want people to view them as a discount shop. And some businesses just can't quite get by without giving a discount from time to time. Besides, sometimes it's nice to let customers get a good deal for your products or services. Most businesses would prefer to strike this balance - give a seasonal discount or an occasional coupon, but try to stay out of the trap of overdoing it.