If you run special offers at predictable times throughout the year, you need to be aware of the full cost.
It’s always more than the 20% or whatever your discount is.
That’s because there are two types of loss when you discount a price or fee. Not one. And the second loss, which most business owners are totally unaware of, can lose you and your business an absolute fortune.
The first loss you probably know
By discounting at predictable times, you train your customers or clients to wait. So that’s what they do. They hold off making the purchase they would have made at full retail, for the special offer they know you’ll run. In these cases, you only lose 20% on every purchase that customer makes of that predictably-discounted product.
You already knew that.
The second loss is much bigger
This doesn’t happen as often, but you take a huge loss every time it happens.
While waiting for your next special offer time to come around, some who would have purchased at full retail, won’t purchase from you now. Or ever again!
Here’s the scenario.
Rather than wait until your next special offer, they get tired of waiting and decide to buy elsewhere.
Why not buy from you at full retail?
Because you trained them not to. You’ve trained them that they’d be losing out if they buy from you now. That’s an extremely painful purchase for them to make, knowing they’re losing money. And many of them won’t make it.
So, they buy from one of your competitors instead.
That deal from your competitor may not be as good as your special offer, but your former customer can have it now. AND without all that pain. Assuming your competitor looks after them, they stand a great chance of retaining your former customer indefinitely.
The kicker?
Very few businesses that have this problem even know it’s happening to them. The overall cost to their business is the lifetime value of every customer they lose this way. And the business owner just assumes the customer left for some random reason.
There is a space in marketing for special offers or discounts. Major companies do it well, smaller businesses almost always make a mess of it and unknowingly lose a fortune right across the board; short-term, medium-term and long-term.
A couple of things to consider
Ideally, don’t discount anything. The only exception here, is if you’re looking to sell time-sensitive inventory that’s going out of date, or inventory items that are depreciating in value.
If you want to increase the number of sales you make or the number of new clients you attract, don’t lower the price or fee. Instead, increase the value of whatever you’re providing. Then increase the effectiveness of your marketing, until it’s utterly irresistible.
A value-packed product or service, with irresistible marketing will sell outstandingly well all year long. No special offers required.