How many times do you scroll through your Instagram feed and see several brands running a discounted promotion? Or walking down the main strip in your neighborhood and see chalkboard street signs or posters offering a discount? All day, every day, in case you’ve never paid attention. 20% off back to school sale, 10% off for new clients, a free cup of coffee if you download our app, and the beat goes on… Discounts are no doubt a good way to bring in new clients and reward loyal ones, but if not done properly, it can kill your business.
Constantly running promotions devalues your business and its worth. Running a promotion once a month, or for every single national holiday is not a good strategy. If you’re running a Labor Day sale, don’t run another special until holiday season. Give your business a chance to capitalize on your last promotion so you can recoup money lost during the promotion. You ran a Labor Day sale- great! Give those people a chance to sit with your product or service that they got that good deal on, love it, and come back for more at full price. If customers know you run back to back promotions, they will wait it out and never spend a full-dollar dime!
Running a general promotion that ANYONE can get dibs on is another killer. If you are running a promotion, make sure it has conditions like “for new customers only,” so your regulars don’t abuse your business. If you’re running a special during back to school time, make it for students in the school district your business is in only. It is important that you stick to the targeted demographic of your promotion and not allow just anyone to get in on it. Even if they ask. A nice “unfortunately, this sale is for new customers only, but you are welcome to book an appointment for any service you would like, as we still have open availability” will suffice. Make them put some respeck on your business.
Run specials for a limited time and stick to it. If it is a 24-hour flash sale, then that sale has to absolutely end at the 24th hour. If it runs for a week, then stick to that week. No exceptions and no extensions. If a customer misses the sale, then WELP for them. Offering personal extensions sends a bad message about the value of your product or service, and your customers may become unwilling to patronize your business outside of a discount.
I had to learn this lesson the very, very hard way. My first business, Blow On The Go, very heavily depended on my partnership with Gilt City, which is a daily deals site. All the rules in this post? I broke ’em all with this deal. We ran them constantly, it was for everybody, and we would run the deal for up to two weeks at a time. It was extremely difficult to retain clients at full price, even though they loved the service! The feedback I constantly received was that the service was great, they loved their hair, they loved the convenience, there was lots of “this is the best blowout I’ve ever had” compliments, but by the end of my one and a half year partnership with Gilt City, I retained less than 20% of the clients. They never needed to pay full price for fabulous, it was like I was the Marshall’s of in-home blowouts.
Discounts can and will kill your business! Running a discounted promotion to, well, promote your business is a very delicate balance. Use it gain new customers and reward loyal ones occasionally, but be careful to not make it one of your dominant strategies.Tags: business, discount, finance, gilt city, groupon, living social, promotions, sale, strategy
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