why I don’t do discounts (and I don’t advise my clients to either)…
Back in the day when I worked in retail, I had a pet peeve… and it was this:
Almost every time our merchandising staff had a really cool offer on something, they wanted to advertise it in the worst possible place… the weekly circular ad.
Yep, that bundle of junk mail you get in your mailbox weekly, or shoved haphazardly between folds of a newspaper.
We had stacks and stacks of them out at the front of every store, so people could see what weekly specials were going on.
And every week, the stores threw out stacks and stacks of those same circulars… totally untouched.
I never understood why we printed so many physical ads when we already sent out a weekly circular ad email. I always wanted to have a Target style ad – one posted up on the wall when you walk in.
Now I know some people love weekly circular ads.
But in my mind they’re blowing through the parking lot like tumbleweeds, for how effective they actually are at driving someone into a store.
The circular COULD have worked if we’d been a little more strategic (like the aforementioned reduction in print costs)… and also if we’d intentionally featured items that naturally lead into additional sales.
One of my friends calls it the “roast beef sandwich” principle.
If someone wants a roast beef sandwich, they’re gonna need a lot of things.
Bread, or a low carb wrap, or lettuce or a pita… condiments… pickles, cheese onions, tomato, BACON, and other toppings…
The options for making a sandwich are endless, and it’s hard to know what anyone is going to buy for their particular sandwich. But if you know they want a roast beef sandwich, then you put the beef on sale and everything can be at regular price.
Note: I’m not saying this because I think you need to be a hard-ass, or because people don’t deserve a discount sandwich.
I’m saying it because if you’re losing money routinely, you don’t have a business.
If you don’t have that business, you can’t serve those hungry people.
So it’s actually in YOUR best interest to make sure you’re balancing giving discounts against protecting margin.
And where we went wrong back in the day? If we had a 6-pack of flowers on sale, we’d also put the pot, the soil, and the water hose up at a discount.
No doubt it was a PHENOMENAL deal for the customer, and could-maybe-possibly create a brand-loyal customer that shops with us for years.
But more often than not, it actually backfired.
Meaning instead of drawing in loyal customers, we brought in discount shoppers. Folks who were content to ignore us for months or years at a time until we put that whole sandwich on sale. They came in for their ridiculously good deal and left, on the hunt for the next killer sale.
And ours were premium offerings… high quality (read: spendy) stuff in trendy looking stores. Talk about message-to-market mismatch.
Come into our high end stores WHERE WE HAVE LOW LOW PRICES. It just doesn’t work that way.
So I’m not a big fan of discounts. I don’t think they inspire loyalty. I think they train customers to look for (and to not purchase until there’s a deal to be had).
I’m not saying don’t ever offer a discount – but there are other ways to add value for customers without giving it all away.
Here are a few examples off the top of my head:
- buy this full price, get this other item that goes well with it for free (I’ve seen this work well at local grocer H-E-B – buy the more-expensive hot dogs and get the much cheaper buns for free)
- buy this full price, get a special bonus we don’t sell elsewhere (I’ve seen this work well in e-learning and online training – buy the course and get this exclusive bundle or training we don’t actually sell anywhere)
- buy this full price, get a special offer to use next time you come in (I’ve seen at retailer Kohl’s, where if you spend over a certain amount of money, they’ll give you Kohl’s cash to come in and spend during a specific time period. Some use it, some don’t, so the company doesn’t have to give everyone a discount – just those who are willing to come back.)
So don’t be afraid to get creative with your offer strategy. Discounting is great for driving traffic, but it’s not what creates loyalty.
VALUE and EXPERIENCE are what create loyal customers.
Something to chew on while you’re enjoying that sandwich.
If you’re an aspiring freelancer who’s working up the courage to leave the day job… good news! I’m sharing all the things I WISH I’d known before making the leap so that hopefully your journey goes a little more smoothly than mine.