Is discounting a solid marketing strategy?
Hint, the answer is NO.
So this Black Friday thing is really filling my inbox and social media feed with LOTS of ‘discounts’ and sales.
I can’t say I’m a fan, (because I hate the way we Americanise our culture but that is another blog post!) I also acknowledge that I’m not running a retail business so I won’t be too harsh with my judgement because I know it’s a lot harder for retail these days.
I can say though that regularly discounting, as a marketing strategy, isn’t a great thing. You NEVER want to make your goods or services about the price. You want to make it about VALUE, about EXPERTISE, about QUALITY, LOYALTY and RELATIONSHIPS. You don’t want to train anybody to hold off on buying from you because at certain times of the year you hold a big sale, year in year out on your products.
To be fair, there are times that you might like to hold a flash sale in your business, and these reasons would be:
- To drive quick sales when you need to stimulate cashflow
- To attract new customers and then work on keeping them in your buying cycle (although they are usually the bargain-hunting kind of customer so good luck with this strategy)
- To clear out old stock
- To give a ‘bonus’ to existing customers and delight them with a discount.
And on the flipside, the downside of having any kind of sale is:
- Bringing in the wrong kind of customer, one motivated by price who doesn’t know anything about loyalty
- You shift the focus to be all about price
- You lower the value of your product, once somebody buys it a discounted rate will they ever want to pay full price again?
- It can create unrest with your loyal customers, they might think you are struggling or in trouble – • I’ve seen this recently with a client trying to move too much old stock, it created massive unrest and lots of rumours they were going under.
- You make less money.
It’s really up to you if you think lowering your prices for a flash sale is a good idea. I would just suggest if you do want to do it, that you be very unpredictable with when you do it so you don’t educate your customers to wait for your sales to buy from you.
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(Image reference: Artist Jorgo Photography – Wall Art Gallery)