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Why discounts are bad for you

Posted by Shaun Nestor on 26 Aug 2010 / 0 Comment

Some companies cannot figure out originality. Worse, yet, they are stuck on a ploy marketed so heavily it has caused consumers to become callused. Yes, worse than sameness is noise.

Noise is what you get when you pump out the same rhetoric as the next guy, doing nothing to separate yourself, your brand, or your product. Customers stop seeing your message.

Take, for example, the theme running rampent within the insurance industry right now: discounts.

I’m not making this up, they will give you discounts for anything under the sun. From owning more than one car, to good driving, to stopping at stop signs, employment history, and almost based on the color of your eyes. I am not discounting (pun) the fact that some drivers are better and more responsible than others, but when your only marketing tactic is to dangle discounts – seeming that anyone could qualify for – where is the substance of your product?

Insurers are not alone. Home furniture stores are guilty, too. Every weekend, without fail, every furniture warehouse in my city is offering a variation of “closeout pricing”, “semi-annual sale”, “blow out pricing”, “no sales tax”, “fill-in-the-holiday special”, etc. I know that, to get the “best deal”, I’ll wait until the holiday weekend to purchase furniture. What a deal, right?

Wrong.

What about the days (albeit few) that don’t have a special discount incentive tied to them? Are the prices just higher for consumers not observant enough to see the dancing cow/sheep/chicken/youth waving sale signs?

Retailers are doing themselves a disservice by offering such discounts. Discounts used to be exclusive, not now. Now they are available to anyone with a pulse. Constant “discounts” train consumers to think, “our prices are high every day …we can afford to give you discounts.”

Why to own up and publish your rates? Tote them as what they are: “the best rates for the most people”.

Retailers, save the grief, step out of the noise and focus on something else that is unique. Set your business apart by foregoing mixed messages.

I’ve spoken on coupons before – and my utter dislike for them. They are discounts. They reward consumers for nothing and cost you, the retailer, money. And, as my friend Ryan, “let’s not kid ourselves and say ‘its not about the money’. It is. That’s why businesses exist.”

So true.

Coupons – discounts – attract the lower demographics of spending. It does not target spenders it targets savers. Savers will not support your business. Spenders will.

In summary, if you are going to give a discount, make it exclusive and a reward for spending and to encourage spending that that customer would not have made otherwise. This, in conjunction with a unique sales position, will give folks a reason to flock to your business for all the right reasons.


About the Author, Shaun Nestor

Shaun Nestor is the Principal at Never Mind Marketing. He focuses his consulting on Inbound Marketing, social media, and using the power of the internet to promote brands.

Shaun has helped hundreds of people around the globe grow their business. His passion is helping small- and medium-sized companies expand their brand online.

You can find him on Google+, Twitter and LinkedIn.


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