Smart Discounting: The Right Way To Discount Your Products

If a store had a great discount in the middle of the woods and nobody was around to hear about it, would it make a difference?

There are two types of discounting. There are arbitrary discounts; these are the type you just make up because you are trying to close a sale or for some other stupid reason. Arbitrary discounts are not only ineffective, but they can often backfire on you and make you look like a salesman. Then there are legitimate discounts that are in place to move a certain product or for some other acceptable reason.

These legitimate discounts work great if you can promote them and use them to bring more customers into your store. Discounts will only eat up your margins if they are not promoted throughout the community. You need to make sure everybody hears about your great discount or else you are doing nothing more than throwing money out the window.

You may also use discounts as incentives to buying an outdated product, or a product that you are simply trying to get rid of. Depending on your marketing and your clientele you can also offer cash discounts or discounts for using your 'in-store' credit card. These types of discounts 'make sense' to the customer and are generally accepted. Not everybody responds to discounts. By having legitimate discounts in place, you will be broadening the range of customers that you can effectively serve.

The point being, your discounts need to be justified. Arbitrary discounts are dangerous and ineffective, not to mention they upset your current customers who paid a higher price. When you discount a product because it is last year's model, or the product has been discontinued, your customers understand and accept this as a legitimate discount. This presents the customer with a valid decision to make -- saving some money and choosing the less desirable product, or going with the hottest product and paying a little bit more. (This valid decision also becomes a great choice close.)

When you take that concept of legitimacy and roll it out into an actual promotion, you have a means to generate more traffic into your retail store. Gather all of your legitimate discounts together, come up with a great way to promote them, and then get the word out. Nothing will upset your customer more than not hearing about a sale that they would have responded to IF they knew about it.

The other day I was working out at my local fitness center as usual. I overheard an employee talking about how they had to through away thousands of dollars of supplements because they were outdated. I thought to myself, well? they did not become outdated all of a sudden. I don't think the dates stamped on the bottles snuck up and surprised anybody. Why didn't I have the opportunity to buy some of these supplements at a deep discounts? (Can you tell I am a bit disgruntled?) I would have bought a ton of stuff at the right price and it would have saved them from the trashcan, as well as put money into the register. However, I never had the opportunity to buy these supplements because I did not know they were on sale. I go into the club everyday and walk passed the supplements and not once did anything jump out at me to alert me of any sale. That is just a missed opportunity, and a costly one at that. What types of opportunities do you have in your business that would be similar to my experience at the gym?

Discounting can be appropriate when the discounting is done for legitimate reasons. Make sure that you are NOT offering discounts for arbitrary reasons, as that will backfire. Once you establish your discounts, you MUST MAKE SURE THAT EVERYBODY KNOWS ABOUT IT! Get the word out. Your customers will thank you for letting them know as they are handing you money. WOW?handing you the money!

Visit Tom's website to sign up for his ezine, receive free products, and buy his new book on guerilla marketing. http://www.tomrichard.com

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