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Whether we're selling a product or service, it’s important to understand the value of our work. Discounts are abundant, offering promises of potential lifelong clients and a surge in profits. We offer some points to consider when playing with the fire that is discounts.
Value your work
Discounts aim to attract customers by the sole attraction of a low price. Price is the one thing that all products have in common, and there will always be a company who will offer a similar product for less.
Your business has taken time and effort to set up. Think about the unique aspects of your work which aren't found anywhere else, or the greater amount of skill involved in what you do that's missing from competing products. Consider placing the emphasis on these points, rather than the price, and customers will recognise, pay for and appreciate the value of your work.
Attract customers, not traffic
Discounts are often focused on new customers, at risk of keeping your existing loyal customers happy. A sudden demand for services from coupon-bearing customers distracts us from our loyal customers who are paying full price. As outlined in the previous blog, 82% of customers stop doing business after a bad experience. The discount may have attracted new customers, but at the cost of customers from whom we gain a profit.
It is important to know the difference between sales and profit, between traffic and customers. Which do you want to attract?
'It cost this much - but it was worth it!'
Countless marketing and feedback studies reveal the detrimental psychological effect of discounts on customers. Those who pay the lowered rate have already been convinced by the offer that the product isn't worth their money. Paying customers expect to be impressed by the service for which they've paid, and are far more eager to acknowledge when they are, and tell their friends.
Consider, too, the return of the discount-paying customer. Will they be happy to pay the full price, when they have enjoyed the service at what they now feel is a fair rate?
Discounting may seem attractive when business is slow, or your storeroom is full of old stock. Consider boosting profits by highlighting the value of your product, and continuing to provide exceptional service to your existing customers. If your prices are accurate and based on personal research, you can be confident in charging the regular rate to everyone. The value of returning customers is not to be discounted.