EPISODE 118 OF THE MARKETING SOLUTIONS PODCAST: SPECIAL OFFERS: INCREASE YOUR VALUE. DON’T DISCOUNT YOUR PRICE
Sonya:
As we head into the cooler months in Australia, things are slowing down for many business owners, particularly in regional areas.
As you might expect, special offers and discounts have started clogging up my Insta feed, and my business brain has me wondering just how profitable these special offers are for the businesses promoting them.
In this episode, I’m going to share my thoughts on when discounting ISN’T appropriate, and what you should do instead. Let’s get your business booming.
Ask any local business owner to list the things they do to attract new business, and one of the first things you’ll hear is “we run a promotion” or “we’ll have a sale”.
And as someone who loves a bargain, I get it.
The perceived value of, say, 20% off can be hard to resist.
But with more and more of my favourite local businesses shutting their doors for good recently, I feel that the days of big discounts are coming to an end.
In fact, when we look at the year’s biggest sales event, Black Friday, discounts were down last year, with many retailers offering 10-20% off their products and services, when the year before we were seeing up to SEVENTY percent off at many retailers.
Times are tough, and nobody’s feeling the pinch more than small businesses.
The industry where I see discounting employed as a strategy most often is the beauty industry.
And I understand the thinking behind it: you attract a new client with a no-brainer of a discount, and then hope that you can convert them to a regular.
And while this may work for a SMALL percentage of new clients, what happens more often is that a new client will take up your discount offer… then they’ll do the same at one of your competitors.
And then another. And another.
When customers can bounce from business to business, never paying full price anywhere, the perceived value of your product or service goes DOWN.
Here’s an example of this in action: one of my team was shopping around for her first “investment handbag”.
She knew the style she wanted, and she jumped online to make the purchase.
She could have purchased the bag from David Jones, or directly from YSL online, but she found it at a third party vendor - at $300 off the recommended retail price.
(And yes, it was a legit retailer, she has the authenticity certificates and everything)
So. She got her handbag, and she got it at a great price. You’d think she’d be happy, right?
WRONG.
By not paying full price, the luxury experience she was expecting seemed…cheaper.
I don’t know what’s going on in terms of buyer psychology there, but I do know that the investment bag she was looking forward to purchasing has been languishing in the back of her cupboard for MONTHS.
It’s easy for me to say “don’t discount your prices, increase your value”, but I need you to understand this: as soon as you discount your product or service, that discounted price becomes what your customers think it’s worth.
The discount is not a ‘one-time’ event, it’s your NEW PRICE POINT.
If someone’s baulking at your prices, or asking for a discount, don’t get offended - get curious.
By asking you to lower your price, what they’re really saying is that the price you’ve set doesn’t match the VALUE they expect to receive.
Questions are the key to clarity, as they say.
Here are a few you can ask yourself, if you want to avoid confrontation:
What is the outcome the client wants to achieve?
Are you communicating the quality of what you’re selling?
What benefits are inherent in your product or service that they’re not yet aware of?
How will your product or service save your customer time, money or effort in the long term?
Think about the titans of industry, or even the businesses in your space who seem to be kicking all sorts of business goals.
Does Apple offer discounts? Pretty much only to students.
OCCASIONALLY when they want to run out old stock.
And while we may complain about the COST of the latest iPhone, we understand the VALUE of the product.
TRUE value is about SO much more than price.
When we look at Apple, you’re paying for CONVENIENCE.
Your iPhone syncs up with your watch, which syncs up with your laptop…
You can also pay for pretty much anything, pretty much anywhere, using Apple Pay
(Side note: I have thoughts about what Apple Pay is going to do to disrupt the banking industry - shoot me a DM if you want me to cover this in a future podcast episode!)
Apple doesn’t sell phones. It sells an EXPERIENCE.
So, when it comes to your business, what’s your point of difference?
Next day delivery, like Amazon?
Decades of experience?
Superior quality?
Above-and-beyond customer service?
If you can’t answer that question, then you can’t expect your customers to be able to.
Case in point: I recently got a quote for some repairs on my car from a local mechanic.
Now, mechanics get a pretty bad rap for being shady, but I’ve found one that I really like, and they’ve never once let me down.
Their quote listed out every single aspect of the repairs, from parts to consumables to labour, all broken down.
Their labour cost? $120 an hour.
And these weren’t small repairs, either.
The total time quoted was 5 hours.
My reaction?
…“When can I book in?”
My mechanic may not be the cheapest in town.
And they couldn’t get me in for a week, but I was happy to wait.
Why? Because they’ve always been 100% upfront about the work they need to do, how much things will cost, and have, on occasion, fit me in last-minute when my car was shuddering and I had to drive down to Melbourne the next day.
TRUST is the value proposition that sets them apart. I’m happy to pay $600 for their time and effort because I know that the RESULT - a fully functioning vehicle - will be worth it.
So, where in your business are you NOT communicating your value?
What can you offer INSTEAD of a discount?
Value may be subjective, but here’s the good news: YOU get to say what your value is.
And if the market doesn’t agree? You need to take a good look at why.
At the end of the day, the hallmark of a successful business isn’t a one-size-fits-all thing.
But if you have repeat customers, happy clients and staff, and you’re profitable?
You’re doing alright, ESPECIALLY in this economy.
And if you don’t?
Our team is always happy to audit your marketing activities to identify the disconnect.
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I’d love to hear from you - have you seen a great example of providing value, rather than discounting prices? Did this episode spark any genius ideas?
Let’s keep the conversation going, over in the Boom Your Biz Facebook Group. Just search Boom Your Biz and submit a request to join.
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