Discount is for dummies (here’s what to do instead)

Discount is music to our ears when we are at the other side of the table. Perhaps, a sale or discount is a way to lure customers to come and try the offering. It an easy but definitely not the best way. We’ll tell you why.

Discounting degrades the values of your brand or company
Sales representative job is to convert prospects into customers, discount reduces their efforts and customers may find it difficult to establish trust in the company where salespeople don’t take their job seriously.
Discounting leverages a host of benefits for the short term, but soon it may evaporate your margins and make it difficult for your organisation to recuperate.
Discounting is a never-ending battle, whether it's you or your competitors, no matter who wins, your profits always tend to suffer.
Discount is termed as a trade-off for receiving something cheap or inexpensive which will never bring back a loyal customer, hence not good for long term survival.

Statistics show that customers who receive discounted products have to pay double later on and so their happiness is short-lived making customers never turn towards that brand again.

Then why do people still buy at discounts and why do businesses still provide a discount?

Convenience: Follow up is hard but giving a discount is a convenient way and will allow the customers to jump at the first available opportunity
Efficiency: Discounts boost sales and revenue albeit for a short period. Customers wait for discount rates.
Derive Pleasure: Customers consider this as loot and business likes to see a spike in their revenue

It's a win-win situation for both the party, however, the epiphany is momentary and ephemeral because the price of the product may reduce but you have to pay price for your discounted nature.

Customers are conditioned to move towards easy, cheap and lucrative offers and this is when the organisation take hold of the weakness and provides something invaluable to increase the sales. Little do they know to gain an ounce of sales they are losing a pound of trust.

In today's market of indifference and mass production, discounts seem a feasible and viable option, because ultimately customers while purchasing will see the price and think twice before making the decision. So the only choice that remains here is to innovate something out of the world that will elevate the veil of discount culture.

As it is impossible to think beyond existence, there are few ways that can end the discount tradition.

Promotion

Slashing your prices is a big no-no, so you can make your customer’s head turn all but in a smart way. Instead of sales discount creating a promotion which is a soft nudge to your discounting strategy can work, offers like BOGO, free shipping, referrals or reviews etc. can create the same noise as giving discounts but will help in managing sales with more pride than degradation. But promotion also requires a strategy. Discount though doesn’t need a full-proof strategy to scale up your business. But investing time into a marketing strategy for promotional benefits is worth a fortune.

Bundling

While bargaining is an indisputable affair, we as the owner may not be ready at the agreed price so the least we can do is bundle up a few products or services that sound like a good deal. When a customer signs up for an X product and gets a few assortments of products at a minimal price not discounted price is a good deal to get an additional business, A smart tactic to uplift your sales in the most organic way.

Value addition

Discounting kills value, so here is the chance to revive your product value. If a customer is using a free version of software you can add a few tools from the premium version that can prove to be valuable. But after a few days of trial, they can easily sign up for paid version for the extra value you provided during the free version. Value addition in today’s world can also be emotional. For example, for every product the customer purchase, the business plants a tree or help a girl get an education or maybe donate to cancer survivors. Thus, adding value to the existing service or product is very important to uplift your brand and business.

Advance payment

Discount is not always bad so you don't have to leave your discount strategy cold turkey but there are offers that can be easily replace instead of big discounts. Negotiating deals with better advance payments is one such powerful strategy. This not only bring cash flows at your terms but also allow you pass on some benefits to customers on prices and create a win-win.

Loyalty Program

This doesn't include a direct discount offer. These are for customers who have been loyal to you and your brand for a long time, and as a token of appreciation, you are providing them with certain programs to expedite the benefits. This helps in customer retention strategy, secondly it also helps in positive reviews and referrals about your brand and encourages repeat purchases.

Breakeven sale after frequent purchase

Discounting at the initial stage may derail your profit. After frequent purchases, you can initiate irresistible offers that may generate high lifetime value customers. This will help in break-even sales and winning the heart of your customers.

Are discounts really worth for your business?

Sales discount is considered a lazy way to add to the revenue and impede your value proposition. To give or not to give a discount wholly depends upon your situation and industry knowledge.

If you think discounting can benefit your business it's important to weigh the risk, and determine whether the customers still have faith in your business and whether the integrity of positive perception of your business is maintained.

Don't give discounts just because everyone is giving, involve creativity to incentivise your discounting structure and let value always have an upper hand not price.

It is necessary to make sure while giving discounts, you are not hampering your margins, weakening your brand or staying low than competitors. At ChalkWalk we coach sales organizations to achieve bigger objectives of top-line without compromising on bottom-line through discounting approach.

Written by Admin, 27 June 2022.

Discount is for dummies (here’s what to do instead)