Discounting, Daily Deals and Your Brand

Toward the end of his article, “The Real Repercussions of Discounting,” Darryl Manco made a very important point. In essence, he asks why you’re trying to cure what ails your business with the wrong medicine.

Here’s what I mean.  In marketing 101, you learn the "4 Ps" of marketing:

• Product (the products or services you sell)
• Price (what the buyer must pay in exchange for your products and services)
• Placement (where you will sell the products or services and the means by which you will get products and services to those places) and
• Promotion (how you will attract and persuade buyers).

The only time discounting is the right cure for your problem is if your product or service is priced incorrectly; in other words, it’s not worth what you’re asking for it. By discounting, you risk sending the message that whatever is discounted does not have value equivalent to its normal price (i.e., its worth less than you said it was originally—and couldn’t this lead the buyer to question your integrity – as the price-setter – as well?)

So then, if “price” is not the problem, why would you try to solve the problem by discounting?

I’ll tell you why: it seems like a quick fix, a bandage, a medicine that will take care of the symptoms.

Don’t we often medicate ourselves that way? It’s like taking a sleep aid when you have a cold. Sure, you’ll sleep, but it does nothing to help fight the cold and make you better.

When you have a cold, that’s probably harmless. But in business, covering up the symptoms can be deadly.

Assuming that your products and services are, in fact, priced fairly and in accordance with their value, what problem do you really need to cure:

“Product” problems:

• You’re not offering what your current clients, ‘ideal client’ types and target markets really want or need

“Placement” problems:

• Your business is located in the wrong place for your product-price-promotion mix
• The way in which you provide these products and services (personnel, customer service, etc.) is not up to par; it doesn’t help stimulate repeat business, referrals, retention or customer loyalty

“Promotion” problems:

• You are doing little, if anything, by way of marketing beyond opening your doors every day, any marketing that occurs is by accident
• You have not taken the time to identify your ‘ideal client’ types
• You know your ideal client types but have done nothing to reach out to these target markets
• You don’t have anything that even remotely resembles a marketing plan and all your marketing ‘efforts’ are one and done attempts
• You don’t have any incentives for customer loyalty and referrals

Before you discount, identify the real problem. 

Your location-based offer needs to be part of your overall marketing plan. It is not a substitute for a marketing plan. It should be one of many other tactics you employ in order to attract new clients.  Otherwise, you will simply be exposing new clients to the same problems within your business.

If you do extend a location-based deal, here are some things you need to know:

1. You will be selling a product or service at less than 25% of its regular price and its real value. Rather than discounting any one of your regular products or services, create a special product or service to offer. That way, your regular clients will not perceive that you’ve charged them twice as much as deal-buyers, nor will they mentally perceive a reduced value on any of your regular products or services.
2. Realize that your regular customers are going to be impacted. One, some may wonder if you’ve been overcharging them for the same service or product you’re now willing to discount. Two, and probably even more importantly, if you have an influx of ‘new customers’ by way of daily deal purchases, the level of attention, customer service and product or service quality you impart on your regular clientele could suffer.  So you need to have a PR and operations plan in place, including staff assigned to handle any temporary overload or consequent impact to regular customers. 
3. Getting a new customer in the door is less than half the battle. Some of these daily deal buyers will not become long-term customers. You need to plan to expend the same level of quality of care and customer service on these individuals – if not significantly more – than you do your regular customers if you want to turn them into long-term, loyal customers.  

There have never been shortcuts to doing things well in business – and there still aren’t!

The road to success, client acquisition, loyalty and referrals remains what it’s always been: knowing your customer, giving them what they really want and doing so in ways that exceed their expectations, over and over again.   The only thing worse than doing something wrong for a year, is doing something wrong for a year and 1 day. It’s time to put your business and your customers first, return to the ideals that made you open your doors and do what you first set out to do!

Elizabeth Kraus | Author, 365 Days of Marketing
www.12monthsofmarketing.net