Welcome to the latest edition of our brand new weekly series, Break the Rules. Each week our plan is to highlight something you will have heard from some marketing expert as a best practice to be disobeyed at your peril. And we’ll tell you why it’s a rule you should break.
Last week’s rule was Charge Enough to Cover Your Costs.
This week’s rule = Offer Discounts
Special offers bring in new business. That’s a fact. It’s been tested and proven over and over again.
But not every company does it. You would think that if discounts work to bring in customers, everyone would offer them. But they don’t. Why?
The answer to that question is the reason I’m telling you to break this rule.
Discounts and special offers can carry a negative connotation. In the mind of the consumer, you are changing the value of what you offer. And offering too many discounts can train consumers to look for discounts, meaning fewer and fewer people pay full price.
It’s a nasty spiral that many companies get caught in. Business is slow, so they start discounting to drive new business. It works so they start offering more discounts, bigger discounts, more frequent discounts. Soon, you have no choice but to continue to offer discounts because stopping would mean no more customers.
Companies that don’t discount at all are protecting their brand’s integrity. Luxury brands don’t discount, because discounting would mean they are no longer luxury.
So you have to decide as the marketer or brand manager how you want the consumer to view your company. If you want to compete at the high end of the price scale in your market, own it. Don’t fall into the discount trap when business slows down. All of your marketing efforts should go toward supporting the value you offer over and above the competition. If you succeed in that effort, you won’t have to discount.
So decide, and decide fast. Because once the discounting bug takes hold, it’s hard to shake it off.
Don’t believe me? Ask JCPenney.
Have a “rule” you think we should write about? Share it with us in the comments below or post it to Twitter @zheller using #marketingrules