Toward the end of his article, “The Real Repercussions of Discounting,” Darryl Manco made a very important point. In essence, he asks why you’re trying to cure what ails your marketing with the wrong medicine.
Here’s what I mean. In marketing 101, you learn the “4 P’s” of marketing:
- Product (the products or services you sell)
- Price (what the buyer must pay in exchange for your products and services)
- Placement (where you will sell the products or services and the means by which you will get products and services to those places) and
- Promotion (how you will attract and persuade buyers).
The only time discounting is the right cure for your problem is if your product or service is priced incorrectly; in other words, it’s not worth what you’re asking for it. By discounting, you send the message that whatever is discounted does not have value equivalent to its normal price (i.e., its worth less than you said it was originally—and couldn’t this lead the buyer to question your integrity – as the price-setter – as well?)
I’ll tell you why: it seems like a quick fix, a bandage, a medicine that will take care of the symptoms.
Don’t we often medicate ourselves that way? It’s like taking a sleep aid when you have a cold. Sure, you’ll sleep, but it does nothing to help fight the cold and make you better.
When you have a cold, that’s probably harmless. But in business, covering up the symptoms can be deadly.
Assuming that your products and services are, in fact, priced fairly and in accordance with their value, what problem do you really need to cure:
- You’re not offering what your current clients, ‘ideal client’ types and target markets really want or need
- Your business is located in the wrong place for your product-price-promotion mix
- The way in which you provide these products and services (personnel, customer service, etc.) is not up to par; it doesn’t help stimulate repeat business, referrals, retention or customer loyalty
- You are doing little, if anything, by way of marketing beyond opening your doors every day, any marketing that occurs is by accident
- You have not taken the time to identify your ‘ideal client’ types
- You know your ideal client types but have done nothing to reach out to these target markets
- You don’t have anything that even remotely resembles a marketing plan and all your marketing ‘efforts’ are one and done attempts
- You don’t have any incentives for customer loyalty and referrals
Once you have identified (and hopefully, dealt with) the real problems, if customer attraction is one of your top priorities, here are some things you need to remember before you daily deal:
Your location-based offer needs to be part of your overall marketing plan. It is not a substitute for a marketing plan. It should be one of many other tactics you employ in order to attract new clients.
If you do extend a location-based, deep discount, here are some things you need to know:
- You will be selling a product or service at less than 25% of its regular price and its real value. Rather than discounting any one of your regular products or services, create a special product or service to offer. That way, your regular clients will not perceive that you’ve charged them twice as much as deal-buyers, nor will they be able to put a reduced-price value on your regular products or services.
- Realize that your regular customers are going to be impacted. One, some may feel that you’ve been overcharging them for the same service or product you’re now willing to discount. Two, and probably even more importantly, if you have an influx of ‘new customers’ by way of daily deal purchases, the level of attention, customer service and product or service quality you impart on your regular clientele may suffer.
- Getting a new customer in the door is less than half the battle. You should not expect that a large percentage of these daily deal buyers will ever become long-term customers. You need to plan to expend the same level of quality of care and customer service on these individuals – if not significantly more – than you do your regular customers if you hope to have them return a second time. You also need to be aware that:
- Few, if any, will be among your ‘ideal client’ types or target markets in terms of where they live, lifestyles, interests, etc.
- Few, if any, will live within an area local enough to your business for you to expect repeat visits. For example, my neighbor is a big groupon buyer when it comes to personal care services such as waxing; in many cases, the businesses she buys from are 45 minutes away or more. There is little, if anything, these businesses could do to persuade her to return and purchase their services at their regular price.
- The vast majority will be motivated by price alone and will be unlikely to purchase your products or services (or add-ons while at their ‘deal’ appointment) at regular prices.
- Most are using the daily deal sites to get what they would buy anyway at a deep discount. They are motivated by the discount, not the quality or type of product or service. When they leave your business, unless you “wow” them like they’ve never been wowed before, they’ll be thinking about the next deal they want to redeem, not about their next visit to your business.
- You’re going to wait a while for your money. Groupon holds funds sixty days (or longer) so don’t count on this model for a quick influx of ready cash.
The fact is, a lot of business owners thought that groupon and other daily deal sites were going to provide a work-around for their real problems, or at least it would give them so many new customers that they wouldn’t have to identify and do the harder work of solving their real problems. There have never been shortcuts to doing things well in business – and there still aren’t! The road to success, client acquisition, loyalty and referrals remains what it’s always been: knowing your customer, giving them what they really want and doing so in ways that exceed their expectations, over and over again. If it’s time for you to do the work of creating a marketing plan, branding your business or building the employee culture you need to achieve lasting success, I’d love to help. The only thing worse than doing something wrong for a year, is doing something wrong for a year and 1 day. It’s time to put your business and your customers first, return to the ideals that made you open your doors and do what you first set out to do! *** Elizabeth Kraus is the author of 365 Days of Marketing and Make Over Your Marketing: 12 Months of Marketing for Salon and Spa as well as the 2012 Salon and Spa Marketing Calendar.