The World of Discounts, Coupons and Should I Cut My Price in a Recession?
January 9, 2012 at 8:04 am | Posted in Uncategorized | 2 Comments
Tags: Bloomspot, cutting prices, Groupon, Living Social
I’ve been a sales consultant/trainer for 20+ years and in the last 2 years have seen more discounting, couponing, “special” offers and give-aways than in all my years in business. I do understand that this is a direct result of what has been an unprecedented poor economy and of course, there is the seductive pull of Groupon, LivingSocial, Bloomspot and so many more. I’ve been tempted myself and have even reached out to several of these sites only to have my emails ignored:) And many of my clients, well, even if they’re not interested in going the way of Groupon, many of them are running scared and looking at how to slash their pricing in the hopes of staying alive.
But really, is this the best way? Here are some questions to ask yourself:
* Will cutting your price undermine your brand and cause confusion and desertion in the marketplace? The last thing that you want to do in a recession is lose the customers that you have. Will cutting your price cause them to shift their loyalties elsewhere?
* What’s going to happen when the recession ends (and end it will one way or another!)? Will you be able to “re-adjust” your pricing? (Didn’t think so.)
* Can you even afford to eat into your margin and will slashing your prices / fees undermine your very financial solvency?
* Can you provide the same levels of quality deliverables and exquisite customer care at a lower price point? Note that if you cut back in these all-important areas you will lose even more clients and perhaps damage your brand forever.
So what’s a business to do? Here’s a thought. How about instead of cutting your prices and looking for all manner of discount “deals” you attend to what you provide to your customers, like an amazing product or service that delivers real value to the market, service that is so outstanding that folks wouldn’t dare go the way of a lower cost provider, impeccable attention to what the market wants and then attention to what they need (need takes second place to want) and keeping your finger on the pulse of all this with customer surveys and Voice of Customer research.
So before you make what could be an irrevocable change in your pricing strategy, think of alternatives and move carefully. That slash in price just might hurt your business forever.
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Great post topic with some excellent points. I recently evaluated my price structure, and wound up raising a few prices and leaving others the same. I am able to build a package based on my client’s needs and budget, without sacrificing quality of service, and actually, they are getting more value.
Comment by Tami Racaniello— January 12, 2012 #
I teach DSLR photography and one of the companies that sets up my classes uses Groupon and Living Social coupons. In my mind – the jury is still out if this is an effective strategy. However; the idea here is to get new students into our various classes at a 50% discount. They can only use a coupon once – then if they sign up for other classes it is full price. And our basic and intermediate classes – which tend to be good sellers – does not accept coupons.
So the strategy is to get more people initially into our doors – and then with great classes and instructions – get them to buy other classes in the future (and adding their email to our vast directory).
For me, it means far less money initially … but we will see if the strategy helps me to grow my business once they are in the door.
Comment by stephen harris— February 8, 2012 #