We all know that customers love a deal. In fact, some people live to coupon. Discount hunters are almost always on the prowl.
You want more business. You want to attract new customers. How do you do it?
If you’re thinking about running a promotional sale, discount or other sale, you might want to reconsider. Here’s why:
The Woes of Discounting
It’s true. Discounts can quickly generate a sizeable sales spike.
While seeing your sales numbers rise can be euphoric, discounting may not be the way to go. It’s true that business after business runs sale after sale, but discounting can quickly destroy your business.
For example, JCPenny ran so many sales and discounts that less than 1% of their sales came from full priced items. As a result, the listed price of their products meant nothing.
In an effort to change this, JCPenny tried selling a $14 shirt that normally sold on discount for $6 at a new list price of $7. Sales tanked when JCPenny tried this “low price all the time” strategy because customers no longer saw a sale or discounted price.
JCPenny customers stopped buying because they were waiting for a discount to come along.
Why You Shouldn’t Use Discounts
Discounts are a terrible idea if you want to see long term business growth. Once you start offering discounts and sale prices, your customers will be trained to expect it. When you don’t run a discount, your sales will tank—just like JCPenny.
Discounting can erode the value of your brand to your audience. Once it comes at a discount, they no longer want to pay full price.
Once a customer thinks they can find a discounted price for your product or service, they will actually delay a purchase to search for it. The best strategy is to never use a discount or coupon to begin with!
Adding Value vs. Lowering the Price
If discounting is detrimental to your business in the long term, what can you do to spike sales? The answer is simple: add value.
You can add value to generate new sales growth by promoting the full price of your product or service plus an addition at no extra cost. For example, if you want to generate more business during tax season, you might offer your services at full price plus a free eBook stuffed with tips that can help increase the client’s tax return next year.
By adding value versus offering a discount, new clients will pay full price and get an incentive to buy now. Putting a time limit on the added value is important so that potential customers won’t want to miss out on the additional value.
You can promote healthy long term business growth by avoiding the pitfall of discounting and running promotional sales or coupons. By adding value, you’ll train your customers to expect more bang for their buck through incentives, not discounted prices. As a result, they’ll return and purchase even when you aren’t running a promotional offer.
To see how you can add more value and charge higher prices, check out our ebook, Accounting Firm Owners: The 7 Secrets You Must Know To Increase Profits in 2014.