I know, it sounds crazy, but read till the end and you will be convinced never giving any discounts anymore.
So let's jump right into the topic. Here are the 5 reasons followed by 5 suggestions.
1. You will harm your Brand
Your Brand is your asset. You should treat it as such. Unless you are running a really cheap discount store, your brand gives you the opportunity to charge higher prices. By offering discounts you are positioning yourself as a "cheap" product or service provider.
Kindly check out premium brands and see what kind of "Deals" or "special offers" they provide. Did you know that the luxury retail company Louis Vuitton burns the remaining goods, to maintain its exclusivity and avoid selling them on a lower price, they set it literally on fire!
Pricing is one of the 4 core Marketing Mix pillars. Your Price signalize the value your clients are getting from your product or Service.
We did a test for one of our eCommerce stores. A brand new product was set at $6.99 and we increased the price step by steps up to $16.99. While the price was too low and too hight we had no sales. When we priced our product at $11.99 we found our winning solution. We communicated the values and the quality of our new brand upfront and the consumers
Competition price was at 6.99
2. Cheap = "I can get it even cheaper"
You are programming your clients to wait for next deal or discount before they make another purchase decision. Price and discounts are signalizing the value your Product or Service is providing to your client. If the client waits for the discount it usually means that your product is overpriced in the eyes of your customer.
3. 10% means 20% more sales to break even
It is a numbers game. If you cut your margin by 10% you have to make 20% more sales to earn the same amount and stay profitable. Many businesses do not calculate properly and as a result - they fail. Sure you can discount only one product, but the risk of hurting and decreasing your brand value is high.
4. The year consists of 365 days and not only of Black Friday
Each Company should calculate the client lifetime value. By concentrating on black Friday the lifetime value will be relatively low. Such Brand will be declassified to No name Brand. Companies need a solid foundation and a proper pricing strategy to survive.
5. You attract only freebees and cheap clients
The hype around Black Friday is high and many people are waiting till the end of November to make major purchase decisions. There are several purchase types.
Consumers spend over $5.400 per year on Average on impulsive purchases of goods. To make your client buy impulsively your brand should provide a unique value proposition. Instead the Black Friday deals attract wrong type of clients.
Here are the alternative startegies you can use to be profitable throughout the year and be attractive to your clients even without giving any discounts on Black Friday.
1. Offer More instead of giving discounts
You want to increase the value of your goods and services. It is better to underpromise and overdeliver. Your customers will associate your brand with more value. Don't undersell your brand, instead keep the price level but offer some additional value.
2. Stable Price is associated with quality
If you analyze the big premium brands, you will see that they keep the prices through out the year. The durability is very important. Don't forget that Price is one of the 4 Pilars of Marketing Mix. It is not just a number. It is your first contact with the client.
3. Upsell, downsell and crosssell
A Client needs at least 7 times to see an ad to make a purchase decision. Many business try to give a discount to catch the attention of the client. Instead you should give your client an irresistible offer! Your client could be introduced to your company with a low ticket product or service, then you can upsell and crosssell.
4. Attracting right clients
In our business, we see a lot of clients who want to have a cheap offer but expect us to give them premium service. There is a simple way to filter out those kind of customers. Product Copy! Yes your communication copy on social media, about me page, Yelp Listing, Google my business and others are the perfect tool to communicate your values and benefits your clients will get. By using right wording you can signalize quality and other qualities and sort out clients, who are bargain shoppers.
If you need help in developing marketing strategy, feel free to schedule a strategy session with us.