BLT discussion: Discounting – how has your attitude to pricing changed over the years? 

On the plus side, discounting (done well) will drive revenues, but on the downside, applied badly, discounting can harm your brand.

On which side of the fence do you sit?

DEFINITION: 

“Discount: a deduction from the usual cost of something.”

Thoughts from around the table 

Yes – reasons to discount

• Situation-specific – start up v ongoing business.
• Client-specific – flex prices depending on who you’re talking to, be it large corporate, SME, or agency.
• Loyalty – more accommodating to clients who pay on time or have longevity.
• Worthwhile causes – charities often receive discounts.
• Memorable headline price – e.g. the coaching company that charges £1,000 p/hour for its services will be perceived as a luxury good and remembered as such. Hence, the perceived intrinsic value will be higher than an equivalent coaching company charging only £200 p/hour…even though the more expensive company may offer substantial discounts.

No – reasons not to discount

• No-brainer prices – have a base price and don’t go any lower than that.
• Attract the wrong sort of customers – certain industries attract those purely seeking the lowest price – e,g. B&B rooms – and therefore not appreciative of value.

The group’s conclusion was that discounting all comes down to a combination of experience and confidence. Experience in knowing your industry and what customer expect, and confidence in knowing your own brand and your ability to discount without undermining that brand.

To discount or not to discount…that is the question!

Types of discount available

• Straight
• Seasonal
• Bogof (Buy One, Get One Free)
• Volume
• Loyalty
• Pre-payment / early payment
• Free shipping

Why discount?

• Gain new customers
• Short-term promotion
• Secure repeat custom
• Get rid of old stock

Once you know the range of prices charged in your industry, it is much easier to see where your business ‘fits in’ and therefore how much room for manoeuvre you possess to discount.

Product v Service provider discounts

One of the reasons why discounts have become such a buzzword has been the explosive growth in online shopping.

Online discounts offer numerous benefits – they are trackable, measurable and visible to all. However, on the downside, discounting too frequently will attract short-term, price-driven shoppers rather than building long-term loyalty . When customers come to expect discounted prices, it can be hard to convince them to pay full prices again.

Note that most of the discounts discussed above apply more readily to products rather than services, and since most of the BLT members are service providers rather than product manufacturers/resellers, extra care has to be taken when positioning online service discounts.

Examples include:

• Free first step; 
• Free download (e.g. book giveaway);
• Early event sign-up discount.

Changing attitudes to discounting

In the ‘old’ days, loyalty was prized and discounting was a key way of building this loyalty. However, in the modern internet era, short-termism frequently overrides all other considerations, hence the more frequent use of discounting as a customer acquisition tool:

• Everything on the internet is no longer necessarily ‘free’ – whereas consumers have always been content to buy physical products (at a discount) over the internet, the concept of paying for advice or information is a relatively new one.
• Subscription models predominate – music streaming, news feeds (especially with the predominance of ‘fake news’ – that’s another blog all by itself!) and delivery services – the internet is now being made to pay for itself, it is no longer a loss leader, and that is good news for people selling services online.
• The Loyalty Penalty – with the advent of comparison websites, consumers have become wise to the fact that industries, such as insurance, penalise (rather than reward) loyalty and that shopping around, or chopping and changing, for short-term discounts is perfectly acceptable.

CONCLUSION

Having discussed ‘Customer Loyalty’ a fortnight ago, and ‘Discounting’ this week, perhaps the next BLT session should join the two topic together and dig deep into practical examples of discounting which enhance customer loyalty?

For the time being though, there was plenty to take away and mull over from this meeting – namely, how can we promote ourselves more effectively using discounting without cheapening our brands? Practical suggestions include two examples (see below)  from BLT members.

Finally, with the 100-year anniversary of the end of WW1 this weekend, it seemed fitting to end with a few words of the subject of ultimate loyalty…

“All gave something. Some gave their all”

Related (free!) content from BLT members:

Helen Isacke (Trusted Coach Directory): ‘How to charge what you’re worth – and get it’, on Tuesday 13^th November @ 18:00 – here’s the Eventbrite page with the webinar info.

James Moorcroft (Canon Moorcroft Ltd): Video summarising the recent budget changes – https://www.youtube.com/watch?v=40aETQX5vu0&list=LLgyDGz1IFijVHw64SNXuDtQ