Is Discounting Really The Best Option?

Everywhere I look I see perfectly respectable businesses tarting themselves out with slashed down prices like cheap hookers. Some of my favourite places are offering me prices so low I (almost) feel a little dirty for buying from them.

Sales have their place in the world of business. Moving excess stock after peek periods or getting rid of those old lines to bring in new products are perfectly respectable. What amazes me are the retailers offering substantial discounts on new stock. Advertising of sale stock has always been used to lure in the bargain hunter who then (hopefully) would be swayed into taking a heap of full price stock with them. Why then are some businesses marking down prices on everything?

Next time you get out the red marker pen and start pimping out your product at well below retail think about the following:

Will you customers still respect you when the discounting stops? Probably not, they will assume you were ripping them blind to begin with.

Example –I like one particular clothing chain (not naming any names but if you ever see me in the street you can check my tags). Their stock (all of it!) is on sale at least one week out of every five. So what is a girl to do? Wait till sale week of course! The strange thing is they still insist on under servicing and over staffing.

Are you cheapening your brand? Your target market may disappear and you may attract a whole new market that you never wanted in the first place.

Example – A local restaurant that I dine at regularly started offering 50% off meals and $12.50 steaks. Previously a large portion of their sales came from wine, now it doesn’t. What changed? Their clientele changed! Where once they attracted a younger crowd who loved a glass (or five) of chardy with their dinner, they now have families flooding in for a cheap feed. Guess who can’t drink gallons of booze on a weeknight? Mums and dads, that’s who! Guess who doesn’t want to sit in a restaurant with screaming (but I am sure lovely) kids? Me, and the rest of the “its fine to drink excessively during the week” crowd!

So what are the options?

  1. Sharpen up your customer service! Know your product, know your customer and know how to provide exceptional service.

  2. Consider a value add instead of discounting. A glass of house red with a full priced meal would have avoided luring in the wrong customer (and gotten the right customer tipsy enough to splash out on a fancy bottle of red).

  3. Reward those who shop with you regularly. Provide a “members only” promotion or a rewards system that lets your regulars know you appreciate them.

  4. Keep in contact….constantly! Databases are gold mines when sales are down. It is easier to sell to your existing customers than to constantly look for new ones. Don’t underestimate the power of regular newsletters, social media or just a good old-fashioned phone call! If you have never bothered to start one, now is the time regardless of the industry you are in (and poke yourself in the eye, you deserve it for not starting one when times were good!)

So now you may be reading this thinking “this girl has no clue what we are going through! Well think again! I too have ruined relationships with great customers by discounting new product lines and have attracted the wrong customer with cheap stock. It took a lot of hard work to regain the ground lost. Don’t make the same mistake!


Melanie Miller
Small Fish Business Coaching Gold Coast

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