Discounting can be addictive. Once you set up your first one, and start to see more customers coming in, you start to introduce more and more. Soon, the speed at which a discount can have an impact will make you hooked on them. After a while, you’ll need to put in bigger and more impressive discounts to achieve the same levels of success. Although it feels good now, it will suffocate your organisation of revenue, complicate your admin and generally make life more difficult.
Why should I stop?
There are a lot of benefits to be gained from not bombarding your potential customers with discounts. A discount can often take away from the benefits of your class, or of being a part of your organisation at all. When something is reduced in price, it can often tell a customer that there’s also a reduction in quality. Think of when supermarkets or clothing retailers discount items, it’s often because it’s unpopular and is either going out of date, or out of fashion. If you’re discounting more than your competitors, it may come across to your potential customers that your competitors offer better quality sessions than you, so the only way you can compete is on price.
A discount can also highlight the health of your organisation to your customers. If you’re putting in a sibling discount for example, that will tell your customers that you’re struggling to get people through the door, and that you need to push to get more customers to attend your sessions.
Customers will also become reliant on the discounted rate to continue spending money with you. The discounted price will become the price they expect, meaning you may drive away previously happy customers when the discount is removed or returned to the old price. There are several examples of this in modern history where organisations have discounted themselves out of business. As their customers became entirely reliant on discounts and end up suffocating the amount of cash flowing into the organisation.
How do I stop?
The key to removing discounts is showcasing and increasing the value of what you offer. It is not a good idea to remove discounts cold turkey. To your customers this would appear to be a price increase with no increase in quality or value and may cause customers to leave. There are three fundamental ways that we recommend trying to free yourself from the stranglehold of discounts.
1. Free gifts
What small items could you give out as an added extra to encourage customers to commit? These items must be appealing and appear valuable to your customers. Things such as branded merchandise often work well and can be implemented relatively inexpensively. If a pair of siblings were able to get matching welcome packs with a rucksack filled with goodies, on the condition they both joined up, you would help to overcome the price barrier from the parents of needing to pay for both children. The most important part is the word free, which has been proven to have a far greater influence on the customer’s decision making than offering the products at a discounted rate.
2. Extra features or extra value
What exclusive benefits can you give people that sign up to encourage commitment or extra spending. Could you offer early or exclusive access to an event or camp? You could even give people priority booking for birthday parties or any number of exclusive benefits if someone signs up in the way you’re looking to promote.
3. Loyalty rewards
Perhaps the most common form of non-discount reward, these days it’s difficult to go anywhere without seeing some form of loyalty scheme, from Nectar Cards to Clubcard’s and everything in between. The draw here could be, instead of a discounted monthly rate for 2 siblings, a loyalty reward could be redeemed at twice the speed with both children attending, making the earning of the reward that much more appealing. This is commonly known as the IKEA effect, where the effort of building the furniture yourself means you place more value in it.
Final take on reliance on discounts
Whilst it can feel like a bold move to remove discounts that your customers may have relied upon, by adding extra value you can move away discounts, increase your revenue, and build a far more productive commercial relationship with your customers.
Still feel like you need some more help? Would you like more personalised commercial advice and business partnering to unlock the potential in your organisation? Reach out to James Brooker, Strategic Business Manager at LoveAdmin, who can support you and your business. Book a call now here.
