You’re Not Suitable for Sales: Part 4

I don’t believe discounts win customers.

There is a time and place for discounts. However, offering more and more discounts is detrimental to business. By making price the primary focus of your discussion with the customer, you are in fact saying that you have nothing more to offer to the customer. Your product, features, benefits and everything else takes a back seat.

Discounts given at the right time may bring in a temporary surge in sales. However, if discount offers become a habit, customers will tend to alter their buying patterns to match your discount offer patterns. The result will be long periods of low activity followed by short periods of high activity. Therefore, while for most of the year you will be wasting money on carrying inventory, rentals and salaries, at the time of discount you may have a shortage of staff and inventory to cater to customer demands.

Both conditions are not suitable for business. The better practice is to create demand throughout the year which enables you to spread your costs evenly. To do this you need to create product offers that are of value to the customers.

Another phenomenon is one of perpetual sales. We can now see yearlong discount offers at some retailers and you may believe that these would help distribute product demand and create a predictable sales cycle. However, the down side to this is that customers develop a sense that the retailer is gaining huge margins on products that are not on sale. They thus develop an opinion that the retailer is not giving them value at full price. And they can also consider that after a while the items not marked in the sale will be offered on sale so they delay their purchases.

There are times to offer discounts of course. But these are strategic decisions rather than permanent ones. Items going out of fashion, inventory going obsolete, items close to expiration date. If these can be moved out by offering discounts, do so. The loss on the margin will be less than the loss of disposing of the goods as scrap.

Create value in your products, streamline delivery and wow them with your service. This will ensure the customers are willing to pay the prices you offer.