Most people in small businesses don’t know how to use discounts to improve sales and attract more customers.
You see, a big deal in your marketing and pricing is to understand how to leverage discount (or offer) pricing.
These days people won’t just respond to “10%” off because it’s just not significant enough to motivate people.
After all, 10% is hardly a headline-grabbing offer.
This video, and post (below) explains:
Why Small Discounts Don’t Work
This post was inspired by an ad I saw on Facebook.
A local brewery was offering a 10% discount.
I thought, “10%? That’s not much.”
In New Zealand, 10% discounts are common, but they don’t excite people.
These people clearly don’t know how to use discounts effectively.
Unless it’s a big purchase like a house or a car, 10% off doesn’t motivate people to do anything different.
Use Better Terms Than “Discount”
The brewery missed the mark with their discount.
So, here’s a key tip:
Stop using the word “discount.”
When customers get a discount once, they often expect it again and again.
This can lead to the temptation to be constantly lowering your prices and cutting into your profits.
Instead, use terms like “special offer,” “promotion,” or “offer price.”
These terms won’t make people assume that they will get future discounts.
Who Should Get Your Discount?
Think about who you want to target with your discount.
Are you trying to get existing customers to buy more, or are you looking to attract new customers?
It’s important to know how much a customer is worth over time.
If they only buy once, a discount won’t help much.
But if they keep coming back, offering a good discount the first time can be a smart move.
Make the Discount Worth It
Let’s be honest: 10% off isn’t very exciting.
If the brewery had offered 25% off, I might have been interested.
I recently got a bundle deal from a pie delivery company that didn’t mention a percentage. They just offered a set number of pies for a special price. It was a good deal without using the word “discount.”
And, just in case you’re wondering, pies are a big deal in New Zealand.
Know Your Customer’s Lifetime Value
Understanding how much a customer is worth over time is crucial.
This is often referred to as Lifetime Value, or LTV, in marketing terms.
For example, if a customer brings in $1000 over their lifetime and you make $500 in profit on that spend, you can afford to offer a big discount to get them to buy the first time.
This way, the discount is an investment in a long-term relationship, not just a one-time sale.
Create Attractive Offers
Make sure your offers are really appealing.
During Labour Day sales in New Zealand, some stores offer 40% off, which is very tempting.
I recently bought a wetsuit at a 45-50% discount because it was a great deal, even though it was last year’s design.
A 10% discount wouldn’t have interested me at all.
Conclusion:
To sum up, avoid using the word “discount” and choose terms like “special offer”, sale price” or “promotion.”
Make sure your discounts are big enough to get attention, especially for new customers who may keep coming back.
Ensure your offers are exciting and worth it.
After all, nobody gets out of bed for 10% off.
Want more on improving sales? Check out:
Why competing on price is a bad idea for your business! (article and video)
Why most people suck at sales and what you can do about it (podcast)