Category: Promotion

Top 3 Dangers of Discounting

Top 3 Dangers of Discounting

Every good horror movie has its signature music that tells you something bad is about to happen. The music starts with a slow ominous rhythm, and then builds to a climax that announces the arrival of the monster or killer.

JAWS. Halloween. Psycho.

You can probably hear those unforgettable notes as you read this.

Businesses do the same thing with their marketing strategies. Things like “loss leaders” are intended to create a sense of urgency and boost sales.

But like any horror movie, there are always dangers lurking in the shadows when a business discounts its products or services.

Just like with those classic movies, here’s the “Part 2” that I promised from our conversation about the gas station owner who offered an unprecedented $2.50/gallon discount for a 2-hour window last week.

While I wasn’t one of the drivers who got into that incredibly LOOOONG line (we talked last time about why I hope no other business owners or their employees did either) …

Let’s unpack a few of the dangers of simply offering a massive attention-grabbing discount and expecting a windfall of sales and new customers.

Here are three of the biggest dangers of discounting (and what to do instead):

1. Driving “transactions” and instead of creating “relationships”.

Let’s be real for a minute. It’s 2022. It’s easier than ever, and it’s almost expected, that to get discounts of any real magnitude, people understand that there needs to be some way for a business to have a path to recoup lost margin.

In the gas station example, perhaps this would be joining a text club or email list. Either of which could happen in seconds with a QR code or staffing the pumps for this short window of time.

Sure, the cost to run the promotion marginally increases, but the opportunity to bring customers back is infinitely greater than that small investment.

If you don’t run a business that is built on driving repeat traffic to a physical location, the same principle applies.

Don’t discount without a clear and simple plan to re-engage your new customers to future products or services at sustainable margins.

2. Missing out on easy and logical ways to immediately capture sales of non-discounted items.

This is a big one.

Bundling other products or services alongside (or instead of) the discounted item is often forgotten. Perhaps the most obvious in the gas station example would be to upsell a car wash along with the cheap gas.

The idea of saving $10-$25+ on the fill-up already creates a sense of “playing with house money” that can then easily be spent on items that feel like a splurge, such as a $7 – $15 car wash.

What if the owner doesn’t have a car wash on location? We’ll cover that in mistake #3, but before we go there…

We know that gas stations don’t make money on gas. It’s all about getting people to come into the store and buying their marked-up convenience items.

If I had a line of customers that stretched for miles, you’d be darn sure I’d have featured items in the store to increase how many customers came inside to get it.

Why not have a staff member walk by the cars in line and hand out a coupon, voucher, or flyer to help make sure they do come inside?

More than zero of the cars in line will have an extra person in the car who could easily spend time buying items in the store while the driver is in line for gas.

Again, taking this outside of the physical store use case:

Maybe I offer a discounted tune-up on an appliance or equipment in a customer’s home…

A first-time special on landscaping or pest control services…

Or a free estimate, inspection, drain clearing, or any number of one-time or seasonal services, etc.

Each one of these represents an opportunity to get into a customer’s home to not only make a great first impression, but also to show how you can serve them by assessing other needs they have now – or in the future – to establish the trust that will lead to sales at full rates.

3. Not leveraging joint venture opportunities.

Most businesses simply ignore, or don’t even consider using, a joint venture to maximize the exposure and to co-invest in the discount strategy (and thus preserve some of the margin lost from the offer) …

I researched the news story that hit our local station for the gas station. Turns out, they did “team up” with a local political group who was looking to use the gas discount offer as a means to draw attention to the group’s efforts to initiate legislation geared toward improving economic policies.

I can’t speak to what arrangements were or were not made to help the gas station owner, if any, but assuming that most businesses may not want to explore political partnerships to drive sales, here are a few ways to use joint ventures that often go overlooked:

Let’s look at the car wash example I referenced earlier.

Maybe the gas station doesn’t have a car wash on site…

How easy would it be to partner with a car wash to provide coupons or vouchers to everyone who bought at least 5 gallons of gas to get a car wash from a nearby location?

The car wash company gets the benefit of exposure to a huge number of customers driven by the traffic generated by the cheap gas, and the gas station owner (should) get compensated for each redeemed and/or distributed voucher.

One more time for those who don’t run storefronts…

Let’s say I’m in a customer’s home providing a discounted repair, and I notice that they need to have their flooring replaced or repaired… why would I not partner with a flooring company to distribute vouchers, flyers, etc. to everyone I see for my discounted repair?

Bottom line? I’m not a big advocate for offering discounts, period.

In fact, there are many other ways to get the same outcome (more sales, leads, or customers) without discounting…but I recognize that there are circumstances or industries where it is more difficult to avoid entirely.

Customers will pay twice the price if they believe they’re getting four times the value.

If you choose to discount, follow the steps above so we can hear hero anthems (Superman, Wonder Woman, Indiana Jones) instead of horror music when we look at your bottom line.

Rooting for the small market team, then it all comes crashing to a halt

Has this ever happened to you? I’m listening to my favorite sports radio talk show and the host is doing a live broadcast on location for a local small business. Because of what I do, I paid close attention for the few minutes I had in the car and found myself rooting for the business to do a good job. Alas, my heart hurts because of what happened in the end…I’ll come back to that in a moment.

But first, we all know how these work. The host announces throughout the broadcast that s/he is live at said business and inviting listeners to come for a visit. The business may have a special deal for those who come by that day. The sheer logistics and planning involved to try and make the most of a sales boost for that given day are immense. From inventory, staff training, local signage, point-of-sale, and the list goes on, these events can and should represent a culmination of a great deal of effort and strategic planning based on the specific goals for the business and how the broadcast fits in the overall marketing mix and budget for the year. Done well, and there’s sure to be some material boost in sales for the day of the radio broadcast event. However, that is hardly going to be enough to really make all of the other resources, heart, sweat, and tears worth it.

Where the real value lies is in the experience and long-lasting impression the event provides for not only those who did go out of their way to visit, but, perhaps most importantly, the message that can stick with the audience to come back time and time again in the future. This is why, usually at the end of the show, the host will speak with the business owner or store manager for a quick interview to give the business a chance to have some dedicated airtime to really drive it all home/land the plane/whatever analogy you wish.

Every other mention or air time the business receives up to this point is fairly formulaic and is sprinkled in during lead-ins to a segment or a final quick bite before a commercial break, but now the lights are on and it’s time to shine. Because the radio host is a pro, he begins the conversation with THE question: “Well, *Jim*, thanks so much for having us out here at (Jim’s store) and for taking such good care of us. Why don’t you tell our listeners today why they should come see you, what really sets you apart and makes you different?”

I know, I couldn’t believe it either. I hadn’t ever heard a host tee up the million dollar question so perfectlydirectly, and exactly for his sponsor of the day – who no doubt paid a decent sum in cash on top of all of the other costs leading up to this point. I’m on the edge of my driver’s seat eagerly awaiting the response that I’m sure will be expertly delivered because *Jim* doesn’t even have to give it in a roundabout way. The host could not have framed it any better. The response, sadly, went as follows: “Uh, um, well, we’ve been in business for 20 years, and er, uh, you can find us on all the social media apps and delivery service apps that are out there, and ummm, yeah our recipes are on point and…”

Bonk. Graciously, the host jumps in and bails Jim out by adding that, “right, and your (named a specific, unique, specialty item) are FANTASTIC and unlike ANYTHING else I’ve EVER had, plus you have the standard things folks love when they’re looking for….” To say nothing about the sloppy execution of the message itself – not everyone is or has to be a practiced public speaker, hey, I’ll even give people a pass for talking into a radio microphone as that can be intimidating, but no matter how nervous or polished, the answer was comprised ENTIRELY of things that could have applied to practically EVERY SINGLE COMPETITOR in Jim’s space.

Not one single thing was truly unique or a differentiator. The closest thing to it was providing his opinion about his “on point recipes”. In a crowded and competitive market, it is absolutely crucial that your business has its Unique Selling Proposition (USP) dialed in and emblazoned across the hearts and minds of every single person in the organization. Each employee has to know the 15-second elevator pitch, especially in small businesses where everyone can truly feel the material impact they can have on the overall success with even the basics in order. If you don’t have your USP air-tight and evangelized throughout your company, make it a priority this week to craft that message so the next time your brand is discussed by anyone associated with your company – whether at a casual outing or in front of a microphone – they’ll be able to deliver a message that makes your business memorable well beyond any one-time promotion or broadcast.

Lessons I Learned from Paris Hilton

Today we’ll talk about shameless self-promotion. That’s right, I said it! Shameless! After all, we are learning from Paris Hilton here.

It’s all about self-promotion! Self-promotion comes in many forms and you can use different tactics to get your name out there. Look at politicians! Talk about self-promotion and in some not so discreet ways, at that. But, seriously, consider some of the major superstars we all know. Madonna, Donald Trump, Howard Stern and Bill Clinton, just to name a few.

We all self promote. Did you raise your hand in class to show the teacher you knew the answer? Of course! That’s self-promotion. This is the kind of self-promotion we are talking about. With dignity, class and the knowledge to back it up. If you self-promote only to prove you don’t really know what you’re talking about, you’re going to lose business.

Natural self-promoters are the former and I want to tell you about the three major traits they have and use to build themselves and their businesses.

  1. The first is position. You need to position yourself around people who can make a difference in your life. You need to do this frequently. You need to wake up every morning and ask yourself “Who can I meet today who will make a difference in my success?” In fact, go a step further, write it in big, bold letters and tape it on your bathroom mirror.

Also consider:

Who can help me meet my goals?

Is it a prospective customer/client? A colleague with contacts? An association with key members who may become prospects?

Don’t settle into interacting with the people who are the easiest to access. You need to reach outside your comfort zone and there you will find a wealth of new connections that will bring you great success.

  1. Now, let’s talk about Style. No, this doesn’t mean you need an Armani suit to bring in more business (though, let’s be honest-it wouldn’t hurt) ☺ What this really means is how are you different from your competitors and others in your industry. What makes you memorable with customers?

If you are meeting a lot of people and they don’t remember you once you leave the room, you have a serious problem! This means you have an opportunity to present yourself in a more memorable way.

There are lots of little subtle changes you can make. Reassess your:

  • Business cards
  • Company message
  • Your picture
  • Your wording

Maybe even, your hairstyle (of course, now we’re back to the expensive suit, but it really works!)

You get the idea. There are lots of little ways you can work on making your image and business more successful. Also, consider how you sound on the phone and how you great people at meetings or other events. Think about your 30-sec elevator speech.

  1. The third trait of natural promoters is repetition. You can’t say it once and leave it at that. Successful self-promoters say it as many times as they need until they get a response. Would you remember a commercial for Coca-Cola if you only saw it once, no! You see it over and over and eventually you head out to the store.

You, also, have to make multiple impressions on those you are networking with in order to build brand awareness. Repetition is in direct connection with positioning. Once you find people to network with, reach out and find hundreds more who can help in your success as well.