For new businesses entering the market, the most common strategy is to turn to discounts and specials to attract more clients. This strategy can be effective, but only to a certain point. Giving discounts can also have a negative effect on your business and can end up costing you more in the long term.
A brand’s strength is built on its ability to remain unaffected by the irregular rising or falling in market trends. Discounts could hinder your growth, or you could possibly lose good clients as they may become attached to your discounts so should you decide not to have any more discounts, it will disappoint them or cause them to leave.
Top 6 reasons why giving discounts is a bad idea
Lack of confidence in your brand
Consider what people think about your product or service if you put a discount on it. Could it mean that you are not confident enough about your brand that you need a discount to give it a push? Or that you don’t see much value in your own service or product that you sell it at a discounted price?
Having a discount greatly affects how your prospective clients perceive your brand. This could lead to the loss of a potential client as there isn’t a strong perception of confidence associated with your products. It can appear as if you are not strongly standing behind what you are selling, as if you don’t trust your own brand, which could lead to a loss. Confidence is everything when selling any product or service.
Discounts add too much emphasis on price
Price comparisons are very common in today’s consumer economy. Offering discounts emphasizes the price of the product more than it highlights the actual products that people are looking for. If the only competitive advantage you have is price, your business could be in trouble. Try to shift the focus towards the benefits of the services or products you offer – show your clients why they are worth being bought, show the quality in your brand to create an everlasting impression.
Customers get hooked on discounts
Once you offer a discount, regardless if it is your 1st or 5th there is no going back. Your clients will always expect a discount and will end up not buying anything without a discount. This will not only cause you to lose business, but to also lose clients. Other than giving discounts to keep your clients, it not a good way to do business as it sets a dangerous standard for your business.
The truth is most people value items based on their price. For example, if you got an expensive Adidas t-shirt versus a cheaper t-shirt and had to choose to give one away, which one would you chose? The one you bought at the cheap store, right? That is because you value the Adidas t-shirt more not only because of its price but also because Adidas has shown you that their product can add value to your life. This is not to say that you must make your brand the most expensive but rather that you should show the value and the impact your brand can have in a customer’s life. Giving a discount might through the value straight out the window.
Loss of trust
The biggest mistake you can make is to give a discount in desperation not to lose a sale. Let’s say you are in the middle of a sale and things aren’t going as planned and your client is not pleased. You decide to offer the client a discount to make the sale, even though you have already told the client that this is “best offer”. This is where the client may start to question and lose trust in your brand because you had already told them about the “best offer you can give them”, now you are telling them a different story just to try to keep a sale.
It is very difficult running a business and trying to generate as much profit as you possibly can. If you decide to give discounts, you will have to put in twice as much time, manpower and effort to catch up with the profit you would be making without discounts. This will, in turn, effect your ability to sell the product efficiently because you won’t have the time. If a potential client sees that you don’t have time to efficiently sell your product to them, it will scare them away because they will see a lack of commitment and dedication.
4 things to do instead of discounting
Focus on value
It is very important to show your client how your product or service can add value to their business. There are a few factors to highlight to a client when pitching like:
- How your service/product can save their time to do other tasks
- Show how your product can be more efficient and cost-effective than your competitors
- You can point out how enjoyable and stress-free your product can be to use
- Show how your product or service is easy to use with no hassle
- Demonstrate how your product or service solves a pain point that your client has
Know your target audience
You would be surprised as to how many companies don’t understand their clients and their day-to-day pain points. Below are a few questions you can look into to know your audience better:
- What needs, challenges and frustrations do they have?
- What are their future goals?
- What does their day-to-day look like?
- What drives them to make purchasing decisions?
- What is the desired action of your target audience?
Knowing your target audience can also help you make changes to your products and services to suit their needs. Your target audience is most likely to choose your product because it suits all their needs and would add value to their lives, not because of a discount.
Show confidence in your product
Excitement is contagious. When you are making a sale, show excitement and confidence in your brand and you will get the buying action you are looking for. If you don’t stand fully behind what you are selling your clients will this, and chances are they will lose interest before you even finish.
Prove that it works
Consumers want to buy into something that has measurable results; they want proof that it works as claimed. Make sure that your sales pitch is backed by powerful data points that demonstrate you deliver measurable results. You can do this through testimonials, case studies or videos of your current clients sharing the results of your products. People believe in numbers, the bigger the results your product has the more they believe or trust in it.
At the end of the day
As much as having discounts may seem like a good idea to generate sales quickly, it can negatively affect your business. If you find yourself in an endless stream of discounts just to keep sales, you might want to stop and relook at your brand and better ways to makes sales without having discounts. Occasionally, discounts do make sense, just make sure what discounting could mean to your business. Find out how to sell more without offering unsustainable discounts