If a store had a great discount in the middle of the woods and nobody
was around to hear about it, would it make a difference?
There are two types of discounting. There are arbitrary discounts; these
are the type you just make up because you are trying to close a sale or
for some other stupid reason. Arbitrary discounts are not only
ineffective, but they can often backfire on you and make you look like a
salesman. Then there are legitimate discounts that are in place to move
a certain product or for some other acceptable reason.
These legitimate discounts work great if you can promote them and use
them to bring more customers into your store. Discounts will only eat up
your margins if they are not promoted throughout the community. You
need to make sure everybody hears about your great discount or else
you are doing nothing more than throwing money out the window.
You may also use discounts as incentives to buying an outdated
product, or a product that you are simply trying to get rid of. Depending
on your marketing and your clientele you can also offer cash discounts
or discounts for using your 'in-store' credit card. These types of
discounts 'make sense' to the customer and are generally accepted.
Not everybody responds to discounts. By having legitimate discounts in
place, you will be broadening the range of customers that you can
The point being, your discounts need to be justified. Arbitrary discounts
are dangerous and ineffective, not to mention they upset your current
customers who paid a higher price. When you discount a product
because it is last year's model, or the product has been discontinued,
your customers understand and accept this as a legitimate discount.
This presents the customer with a valid decision to make -- saving some
money and choosing the less desirable product, or going with the
hottest product and paying a little bit more. (This valid decision also
becomes a great choice close.)
When you take that concept of legitimacy and roll it out into an actual
promotion, you have a means to generate more traffic into your retail
store. Gather all of your legitimate discounts together, come up with a
great way to promote them, and then get the word out. Nothing will
upset your customer more than not hearing about a sale that they would
have responded to IF they knew about it.
The other day I was working out at my local fitness center as usual. I
overheard an employee talking about how they had to through away
thousands of dollars of supplements because they were outdated. I
thought to myself, well? they did not become outdated all of a sudden. I
don't think the dates stamped on the bottles snuck up and surprised
anybody. Why didn't I have the opportunity to buy some of these
supplements at a deep discounts? (Can you tell I am a bit disgruntled?)
I would have bought a ton of stuff at the right price and it would have
saved them from the trashcan, as well as put money into the register.
However, I never had the opportunity to buy these supplements
because I did not know they were on sale. I go into the club everyday
and walk passed the supplements and not once did anything jump out
at me to alert me of any sale. That is just a missed opportunity, and a
costly one at that. What types of opportunities do you have in your
business that would be similar to my experience at the gym?
Discounting can be appropriate when the discounting is done for
legitimate reasons. Make sure that you are NOT offering discounts for
arbitrary reasons, as that will backfire. Once you establish your
discounts, you MUST MAKE SURE THAT EVERYBODY KNOWS
ABOUT IT! Get the word out. Your customers will thank you for letting
them know as they are handing you money. WOW?handing you the
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