Offering Discounts to Consumers

There has always been this heated debate about whether businesses should lower rates to drive business into their locations (stores, websites, contact centers) in a down economy. In the left corner we have those who say if you drop trow (slang for trousers or your pants…see what you can learn on my blog?) on rates you will have a tough time raising them when the market gets better. They also claim that dropping rates will cut into profits, so much so, that you don’t really come out ahead on the profit line. You work harder….not smarter and you don’t net the profit you need.

In the other (right) corner we have the folks who say that they just can’t sit there and wait out a recession without taking positive actions. The cash flow is needed and they need to gainfully employ their staff or they will lose them forever. Maybe….just maybe these “new” customers who are now doing business with you, because you lowered your rate, will stay with you when you raise rates in the future. Which corner do you subscribe to?

My thinking goes more with the “right” corner than the left…..but with important cautions and considerations to executing this discounted rate theory. Here are my reasons:

1. You need to provide for your employees or you do run the risk they will leave you…maybe forever. Your great employees are your most valued asset and it is these people that separate you from being a commodity or being a real value driven, personal services culture that blows people away (a good way).

2. Regardless of the number of employees you have and how many of them sell for you….you can never have enough salespeople…especially third party people who talk you up in the marketplace. So, the more people that sell/communicate/talk for you…the better your chances of generating greater revenues.

3. TARGET your discounting….do not shotgun them into the market for all to see and hear. For example, I am working with a startup health club that needs to grow it’s business fast. We are targeting a discount to consumers, we don’t currently have, that need to get in shape for their jobs and also can influence many others into trying the gym. They are firemen, police officers, mail carriers, teachers/professors and student athletes (colleges, high schools and AAU type sports orgs for kids). By targeting these market segments we can control the volume of the discounting; keep a tight timeline on how long the offer is good for and can justify the discount to the “non” discount public….because of the volume that this market segment can provide us. Most consumers understand that the more business you bring…the better the deal you get (not always lower price….but best value).

4. When the competition is hunkered down waiting for something or someone to come and save them….you will be aggressively pursuing customers who in the past have not done business with you. You will show them that in spite of increased pricing in the future you have VALUE added benefits as to why they will want to pay more to stay with you. You will out-personalize your competition, you will out-service them and you will out-sell them. You will not cut your services/product or value proposition because you lowered the rate. Your competition’s employees will want to work for you and their customers will want to be your customers when you execute at this high level.

These recommendations are taken from practical experiences and not from theories or somebody’s idea of a good book subject. Tell me what you think.