Should You Discount Prices To Get Customers?

Some of you will say never to discount price. 

Getting your pricing right is an important element of marketing. And to get the extra sales boost you may want to consider price promotions.

One of these is offer a price discount that can be an effective tactic to get more customers.

This article is not about reducing your price to get a one off sales and hope extra business will someday follow.

It is about using discounting in a smart and simple way to get your business new customers and increased sales in short term.

When you are launching in a competitive market.

If you offer a discount price in the initial period, it can reduce the purchase risk for customers. And it can help them to switch from competitors to try your product or service.

However caution should be made if the market is full of commodity products or services. Or if you know your competitors will retaliate with reduced prices, as you do not want to get into a price war.

If there are going to be ongoing repeat sales

This is an old and proven way to get customers to trial your product or service. It can be effective if your business sells subscriptions, ongoing service, software etc.

As a lead in price

You often see this type of price discount when a business knows they can add other products or services to the purchase. You see this type of promotion in the travel industry.

If your product or service is bought on a regular basis.

If they are bought on a regular basis it can attract new customers and reward current customers.

A key factor is to think of price reductions as a short term reward and not one that you have to rely on to attract customers to your business.

Does it fit in with your marketing strategy?

If it doesn’t then this tactic should not be considered, as it will not help you grow your business. having a marketing strategy helps you avoid the marketing tactic smorgasbord. 

Do your sums

This is to see how much extra volume of product or services you need to break even. Before you jump in look at the different rates of discounts, you could offer to see how much volume you need. This is important because if you do not get the volume you will affect the margin and potentially the profitability of the brand.

Will it affect your current customers?

If you decide to offer a discount for new customers, then consider if your current customers who paid the full price will react. A way around this is to ensure you have a customer care program in place so they do not feel upset.

Does this tactic have a good fit with other tactics?

The combination of tactics is what matters to get cost effective results. Otherwise it costs your business time and money.

Don’t use this tactic because your business is desperate for more customers and sales. There are better ways and tactics than reducing prices.

However if you have always said never maybe this is a tactic you might want to reconsider to grow your business.

Over to you. As always, I would love you to share your thoughts about using this tactic to get new customers.

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A Great Manager Should Expect a Peaceful Vacation

I worked in an architectural firm in New Haven for about two and a half years. The lessons I learned working there far exceeded anything I could have learned in business school from an entrepreneurship perspective.

The owners not only focused on the current projects, but also constantly looked ahead for other opportunities. I learned about the relentless pursuit of business from them. They were very focused. When we got a little too rambunctious on the floor where all the draftsmen were, they’d say, calm down, let’s keep going.

What were some other early management lessons for you?

Like many people who move from doing to managing, I probably stayed more involved at a granular level than what’s optimal. When you do that, you spend less time managing. Whenever you don’t know what to do, you revert back to what you know, which is, “Let me do it because I can get this done.” The challenge that created was that I wouldn’t necessarily develop people as quickly as I probably should have, because I would often say it’s easier for me to do it, and then they’d watch. But that’s not the same as giving someone the guidelines and saying, “You do it,” and though it may not be exactly the way I would have done it, I can give guidance.

I probably did not do that as well as I could have early on. If you develop people, it means fewer phone calls and fewer interruptions when you’re on vacation. If you haven’t developed them, then you’re tethered to the organization. Some people love to know they’re needed constantly, and that people have to call them. Unfortunately it’s common, but it’s not the best for the organization. I found that when I’m on vacation and getting calls and constant e-mails, then I must not be doing as good a job as I should to make sure that the group can perform without me.

What kind of culture did you want when you started your own firm?

I wanted this company to be operated in a way that doesn’t have the faults or shortcomings that people might have seen at their prior employer. Any large organization has certain issues. I wanted to make sure that we’d do whatever we could to mitigate those. The biggest issues are people not necessarily being valued for their performance and instead being caught up in the bureaucratic hierarchy, where they were either going to survive or thrive or do poorly because of the area they worked in, or their careers could be enhanced or held back by their relationships or lack of relationships.

I want this to be a complete meritocracy. That’s something you have to make sure you constantly let people know. You’ve got to judge people on their merits. You have a variety of personalities, and it never fails that anyone, including me, might prefer to spend time with one person instead of another. But if people are professional, productive and an asset to the firm, my personal preferences shouldn’t have anything to do with it. I try to make sure I emphasize that regularly.

One big challenge for C.E.O.’s is to make sure they get out of the bubble that naturally gets created around them, because people only want to bring them good news. How do you counter that?

Probably the most honest and direct and frequent feedback I get is from my wife, who is a senior fixed-income salesperson here and a partner in the firm. Sometimes my colleagues may not want to come directly to me to find out what I think, or they’ll want to get a message to me, and they will go to her. I don’t always agree with her assessment of me or a situation, but it’s good to hear the input in an unfiltered way from someone else, rather than people just telling me everything I want to hear.

How do you hire?

The first thing I look for are the nonverbal components of one’s overall presence and presentation. Would I buy from this person? Would I want to do business with that individual? Do they look me in the eye? Do they have a certain energy level? Do they seem confident? Those are the kinds of things that really matter most.

I care less about your résumé in terms of the places you worked or where you went to school. What I do care about is how your résumé can give me insights into why you went from one position to another. I’m listening for how someone weaves together the changes in their career, and why they left one job for another. We all make mistakes. We all have setbacks. I’m listening to why someone left.

If I see multiple positions where there wasn’t necessarily progression, that’s always a point of concern for me. I listen closely if someone had a position that is a major change from the rest of their career — if there’s an outlier role. It’s not the worst thing to say, “I was laid off, and I needed a job and so I pursued this position, I gave it a shot, but I eventually went back to my area of specialization.” That’s perfectly fine.

But when people try to present the story of their career so that every move was a step up, everything was perfect and everything is wonderful, then I have to question whether they are realists. Are they going to be someone I’d feel comfortable working with? Or are they going to be constantly putting a spin on everything that happens?

I also don’t want anyone who’s constantly going to tell me what I want to hear, or what they think I want to hear. I find there are times when, if I make my view known too early, then I’ve just shaped the whole direction of the conversation. So when I’m interviewing someone, I will ask them how they feel about certain issues and points, and how they feel about certain organizations.

Before I describe how Williams Capital operates, I want to hear about their ideal environment. I want to hear how they interact with their colleagues rather than me saying, well, here’s the way Williams Capital is, because then I’ll just hear something similar back from them.

 

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