In part one of this series, Amy Harcourt of Definitive Marketing told us of the six scenarios where you should not discount your services.
In part two, we’ll explore the four situations when you should actually discount your services. So what are they? How often should you use them? And how do you know when to show your discount cards to your clients?
Here-s when Harcourt suggests discounting is a good idea, drawn from 25 years of experience in creating proposals:
1) To draw in new customers – If you’re launching a new business and need to build your customer base, consider an introductory offer. This is a discount or special offer on a first-time purchase. It’s a way to help customers overcome their initial reticence to sample your product or service. Only offer it once and only for a limited time. You don’t want to establish a pattern of discounting, like many major retailers do, or customers won’t ever want to buy anything full-priced. Just ask Macy’s about the detrimental effects of over-discounting.
2) To encourage a larger purchase – If you’re proposing multiple products and/or services and you’re not sure your customer will buy them all, you can offer a small discount to encourage a larger commitment. Retailers will offer two-for-one specials to encourage that extra sale. Just make sure that the additional margin you make with the larger purchase more than covers the margin lost to the discount. Otherwise, discounting makes no sense.
3) To move old inventory – If you have out-of-date inventory that is more expensive to keep in stock or otherwise dispose of, then offer a discount!
4) To build your brand and integrity – There are clever ways to discount that promote your brand and business integrity. If you consider yourself a “green” business, you may offer an incentive that conveys this message. Peet’s Coffee gives a discount when you use your own cup, and Apple offers a discount on a new iPod when you recycle your old one. If you must discount, find a way to use it to strengthen, not weaken, your brand.
Remember that if you respond to market conditions by slashing prices, you will cut an enormous hole into your own business. Follow these guidelines for smart discounting strategies and you won’t sink your own ship.
To read more about Amy’s marketing services, visit www. DefinitiveMarketing. com.Gil Zeimer is the Creative Director of Zeimer's Advertising Shoppe. As a consultant with 25 years of advertising and blogging experience, he is a Mad Man who works with businesses large and small. Read his marketing musings at www. zeimer. com. View all posts by Gil Zeimer This entry was posted in Marketing and tagged discounting, Pricing. Bookmark the permalink.