Friday, October 10, 2008

Be Careful With Coupons and Discounts

Due to the tough economic times many businesses are trying to jump-start business by offering steep discounts and high percentage-off coupons. Be careful! Once you discount your product or service customers will expect these lower prices all the time.

You shouldn't get in the habit of sending out coupons on a regular basis, especially if you offer a premium product or service. I like to take the approach that if the customer asks for a discount I might entertain the request. I would never, though, make a broadcast offer. GMC is a good example. A while ago they were promoting "employee pricing" to boost auto sales, and lo and behold, when shopping for a new ride recently I overheard a customer ask for the discount even though the promotion was long gone. An argument ensued and the customer left shouting, "I'll come back when the discount is offered again!"

Am I saying that coupons and discounts do not have their place? They do. I look forward to my Harbor Freight coupon circular every couple of weeks and won't go shopping there unless I have coupon in-hand. Couponing is good here because the tools Harbor Freight sells are something I don't really need. I might be convinced to buy if the offer is enticing enough but I am never going to be a loyal Harbor Freight customer. I am only going to shop on price. If you think your business can survive on that kind of customer mentality then coupons and discounts are the way to go. Otherwise, you had better be selling value and charging what you are truly worth.

Drastic times do cause for drastic measures, but giving away your product or service at cut-rate prices may linger around a lot longer than you really want or anticipated.

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