How being the “discount people” is hurting your profits
Especially as we’re in the last days of the holiday shopping season, it’s tempting to discount – Black Friday! Small Business Saturday! Cyber Monday! Last Minute Gifting! After Christmas Sales! – and you could be hurting your brand by doing it. If your only marketing message is promotion through discounts, you’ve got some work to do.
Here’s 3 ways discounts are hurting your brand:
You Are Only Known for the Deals
Do the work to determine what you have that others in your marketplace don’t. Why would your customer choose you over your direct competitors? If your answer is that you’re the cheapest, you’ll always lose that game.
I bought a car a few years ago, and one dealership had the car that I wanted at the price I wanted to pay. Another dealership here in town put it out there everywhere that they would beat any other dealership’s price on any car. That was all they had going for them – it wasn’t service, it wasn’t buying experience, it wasn’t quality. It was price and price alone. But they had the color and options of the car that I wanted. I called, spoke to a salesperson, told them the price they had to beat, and they beat it … by $1. They had held up their end of the bargain, but the buying experience was awful. The financing folks were rude. The pitch for the extended warranty was awful. And the service department was backed up for weeks. I bought the car, but never went back – not for an oil change, for a free car wash, and certainly not for the purchase of another vehicle.
If you’re the “cheap price” people, the only people coming to your business are the “cheap price” people, and repeat business is non-existent. Remember, it’s much cheaper to keep the customers you’ve got than to acquire new ones.
A Short-Term Gain with Long-Term Consequences
Discounts can provide a quick boost in sales, but they often come at the expense of long-term profitability. If they know that they can buy something for 50% off every couple of weeks, then buying at full price will never happen. If you’ve created a solid program for educating your customer, building customer loyalty, and delivering an outstanding product or service, those strategies will pay off in the long run.
Remember, it costs you just as much to offer your product or service at a discount as it does to offer it at full price. The only difference is in your profits.
Training Customer Behavior: The Discount Dependency Dilemma
Have you ever bought something at Macy’s or JC Penney full price? Like something that goes on sale every weekend? Neither have I. If you’re putting the same items on sale every week, or even every day, then it’s not a promotion. It’s not special. And customers can see right through it, conditioning them to wait to buy instead of buying when they want. It’s essentially telling a customer that the $100 item is only worth $50 – and that the real value of the item is a scam.
To break free from the discount dependency dilemma, businesses need to turn up the volume on marketing. Building a compelling brand narrative, investing in customer education, and offering exclusive experiences can all help raise the value of your product or service. By cultivating a customer base that values the overall brand rather than just the price tag, businesses can create a more sustainable future.
While promotions and discounts are an important part of driving traffic, growing your brand and educating the customer as to why it’s worth every penny is time well spent. Those long-term investments can pay off well beyond the short-term gains of a hot deal.
Do you need to rethink your promotional strategy? We’re ready to help. Contact us today to set up your complimentary marketing audit – they’re our gift to you through the end of 2023!
