Offering Customers Discounts Increase Sales, But Can Also Plummet Your Company’s Bottom Line

As a small business owner, you’re probably always trying to come up with new ways to get customers in the door. One of the most popular tactics, of course, is to offer discounts and sale prices, showing a great value to your potential customers to get them flocking to your business. After all, how often do you look at sale prices, flyers and other tactics that businesses use to lure you? Discounts can be a very effective way of promoting your business, launching a new product or starting a new season. However, if you dole out those discounts too often, you can end up hurting your bottom line, especially when your discounts are predictable.

If you keep the discounts coming, then your customers can start to expect the discounts to continue. Just look at your own buying habits, and you can see predictable patterns with many retailers. How many times do you wait for a specific company to put something on sale before you make your purchase? How often can you predict a price drop, and why would you make a full-priced purchase when you know that same product will be cheaper if you wait just a few weeks? It’s so easy to begin to expect discounts that eventually your customers will refuse to pay full price.

The other big problem that frequent discounters can get into is the habit of customers waiting to make their purchases. Whether you’re showing your customers that discounts are predictable or you’re giving them the opportunity to wait for a sale, you’re hurting yourself and your bottom line. Look at the sales on Black Friday, and you can see the perfect example of customers waiting to make purchases because of the anticipation of a sale.

So what is a retailer to do? You can’t stop offering discounts, as those are a natural part of business and can help many businesses bring in new customers on a regular basis. However, it makes a lot more sense to work your discounts into a plan that aligns with your marketing plan. Don’t offer discounts very frequently and work to make sure there isn’t an established or easily predicted pattern on your sale items. Then, you can mix it up, make your discount work with your advertising and marketing plans, and you won’t have the concern that comes from a predictable discount pattern.

 

 

 

This article was written by Deborah Flomberg of Examiner.com for CBS Small Business Pulse.

 

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