Jim's Marketing Blog

Marketing tips & ideas to help you grow your business, by Jim Connolly

How a Special Offer went badly wrong

cheapIt’s possible for a special offer to go spectacularly wrong, if you fail to look at the offer from the customer’s perspective. Allow me to explain.

Messages and subtext

My wife received an offer from a local restaurant via Facebook. It was an incredible offer, genuinely worth around 90% off the price of a meal for two, with no strings attached. The problem with the offer, was that it was too good. The cost cutting was too steep.

Because of this, the special offer message carried a subtext: A message behind the surface message of the amazing offer.

The first thing my wife said after reading the offer was, ‘that offer sounds like an act of desperation’. She then called me to look at her Facebook account, where her friends who had already been sent the offer, were already chatting about the imminent demise of the restaurant. The restaurant was then on Facebook, trying to reassure people they were not going broke, which made things even worse.

Poorly crafted offers can backfire

The reason this offer created so much negative attention, is that the subtext of the special offer spoke far louder than the actual message. The over generous discount caused people to assume that the restaurant was in trouble. The net result of that offer is that their customer base are openly discussing alternative venues, now this one is probably going broke.

In reality, the day before the restaurant made this offer they could have been in a strong position. Today, they are scrambling around Facebook almost begging people to come back. This now DOES make them look desperate and reinforces the (probably false) assumption, that they were in financial trouble when they made the very special offer

If you are thinking of slashing prices or offering to give free consultations, consider how your offer looks to the marketplace. Does it look like a generous offer from a financially strong business or the final, desperate actions of a business on the brink?

The price slashing problem

Generally, you are more likely to experience this type of problem, when you use price cuts as your special offer. This is because, when something is in great demand, there’s no need to slash prices. As a result, especially if the price reduction is big, people often assume there’s no demand. Such offers seem less like a regular marketing move and more like a panic measure.

As a general rule of thumb, you tend to find far fewer problems with special offers, which are based around providing additional value, for the same price or fee. These offers are usually a lot more profitable too, as the price or fee isn’t being heavily reduced. Price slashing also trains prospective customers to wait for the next offer, making it a lot harder to sell anything at full retail.

In short: Before using a special offer, think about the way the offer will be seen from the perspective of your customer / client and the wider marketplace.

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Jim Connolly

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15 Comments

  1. Gerry Morley

    May 9, 2013 at 17:12

    I have seen this happen too, when a local company lost a lot of money and credibility with their HUGE back to the wall discounts.

    When will people learn that price cutting requires more thought?

    Thanks Jim.

  2. I think a business can offer a huge discount on a small (and under selling) or new offering as a way of building word of mouth, but should make it clear in the offer that this is for a limited time for the purposes of building that buzz.

    Something like a “did you know we also sell” or “We now offer RED Widgets – and for a limited time we’re offering them at a HUGE discount because we want your Red Widget business too.”

    Open and honest, “This is why we’re offering you something too good to be true” disclaimers can do wonders to defray these types of situations.

    • Hi Kevin. 27 experience in marketing means I have to disagree with you. Open and honest is a great idea, but openly and honestly undervaluing yourself is a poor marketing tactic. Training prospective customers to wait for the next fire sale is extremely risky. That’s what happens when we learn you’re the discount guy.

      If someone WANTS to market themselves as being the cheapest, go for it. But they need to be aware that we can find someone cheaper on Google in 30 seconds.

      Thanks for the feedback.

  3. Simples::

    Price cuts are the last resort for sophisticated marketers.

    They are the first resort for clueless Internet marketers.

    Thanks,

    Kelli

    • Hi, Kelli. Thanks for the distinction.

      I do recognise some of that, however, price reductions can work fine – but they need planning.

      To do it the way the guys in today’s post did, is insane.

      Ready, fire, aim.

      Thanks for the feedback.

  4. This type of phenomena can be seen on Amazon today, with the Amazon Select program. There are now whole droves of people who, instead of paying the low price of $2.99 for an eBook offered by an indie author, will simply wait for that eBook to hit an Amazon Select Free promotion day, and then pick it up for free.

    I like your idea, Jim. Value-add promotions have always been stronger, in my mind, than discounts or free promotions.

    I’ve always felt that giving a book (or any product for that matter) away for free, tends to devalue that product.

    • Hi, Thomas. The Amazon idea is a great example, of talented people (authors in this case) being poorly rewarded for their art.

      We have to show that we believe in the value of what we do. Otherwise, how can we expect others to?

      Thanks for the feedback.

  5. Ratheesh R Nath

    May 10, 2013 at 07:34

    I too had similar problem with mis advertisement.
    Few month back one of the biggest textile in our city advertised that they will slash the price of entire garments by 50% after 5th of feb. we all waited for 5th feb and on 5th feb they just put some garments on a corner of that big showroom with out even a sales person and showed us the discounted product.
    Here when they advertised with date – every one waited till date with out purchasing where they lost business till that date and lost credibility of that showroom when they showed that cheap trick.
    we never tried that showroom

    • Hi, Ratheesh. That is a perfect example of the kind of problems associated, with a poorly thought out special offer.

      I can not imagine how much money that company lost, needlessly.

      Thanks for sharing your experience.

  6. 90% is incredibly steep. It makes me think there’s no value left in the product. Although, with a restaurant, we assume a higher pice = better quality. With a 90% discount, you’ve lost all of that and gained a new perception as a struggling restaurant trying to fill their seats.

    • Hi, Michael. You make some good points. That’s the kind of thinking, which was clearly missing from the people behind that 90% special offer. Thanks for the feedback. I can’t help thinking that you gave this more thought with your comment, than the restaurant owner did with their offer.

  7. My first reaction is “If it sounds too good to be true, it probably is!” when I hear an offer like this. I’m always looking for the ‘catch’.

    There are soooo many ways to create value and deliver great offers that aren’t just based on price. Of course, these can be a little harder to come up with so I would also add that simply going with price offers is for lazy marketers.

    • Hi, Sam. Yes, people seem extremely attracted to taking the easy route – anything to avoid REALLY thinking. It’s killing businesses, needlessly. Thanks for the feedback and welcome to the blog.

  8. Hi Jim!

    Haha, I can’t help but laugh, because I’ve seriously have put myself in that position a long time ago. I left one business to another, and I couldn’t figure why my clientele kept getting smaller as I moved from place to place. They for one were never refered (Obviously)! So note to self? The grass is NEVER greener on the other side! If your lost, stay in one place, they will find you!

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