5 Questions Young Business Owners Need To Ponder Before Offering Discounts
Discounts can either turn out well and bad for a business. Taking this route to increase sales and get more referrals especially for young businesses are two of the advantages. On the downside, you don’t want to run the business and let sales stay afloat just because of the discounts especially when you’re a start-up.
Either way, a smart decision is always the best decision. So, as young entrepreneurs, ponder on these five questions before taking into consideration a discount strategy.
1) What matters most, the value or the price?
If you’re off to build a brand for your service or product, it’s best to consider the value. The price should always match the value. For a sale strategy, make sure the discounted prices DO NOT strip away the value of your products or services, because a consumer’s perspective sees discounted price as an undervalued product or a cheaper service. You ought to know that there’s always a corner to be cut for discounts. So, before giving a product or service a discount, find a concrete reason to do so. Remember, a brand dictates the value of your service and product.
The best thing to do: Better use a discount that appeals like an illusion or that plays the desire for discounts. This means making your customers believe they are getting a good deal. You can use two for one discount, group discount or bundle discount strategies.
2) Which products should only be discounted?
You don’t want most of your products to live its sales through discounts, you don’t want that as a young business owner. The downside of getting your products discounted is that customers would be expecting your service and product on a seasonal basis. Although discounts can do more good than harm, take note that discounted items also conditions a consumer to buy a product only if it’s a good deal.
So, the products that are best to give discounts are your old merchandise (esp. when you have a surplus on ordered and produced items). Items that are about to go out of trend before they become a stagnant investment should go. Well, better now than never, your choice.
The best thing to do: Tickle your customers sense of urgency by using discounts that capitalize on very limited time or a discount that displays scarcity. That way you can grab their attention and increase your chances of getting good revenues.
3) What are the advantage/disadvantages for your competitors?
For competitors, placing your business in the discount boat may be a signal of distress to compete for more customers. This means losing confidence on your part as a young business person. At the other end of the line, this can be a benefit if you have serious competition. Getting discounts can be a treat for your customers, especially if loyalty is what you’re after.
The best thing to do: Offer discounts fulfilling the fondness of free or discounts that leverage on the illusion of luck such as surprise discounts or gifts. Offering excitement of surprises keeps your customers coming back for more. This could reward you the loyalty of your customers as well.
4) Who are my target audience?
It is always important to know your audience. Getting to know your customers’ wants and needs helps you get the right products and services for your business.This also helps you in determining the strategies to create for your target market. Plus, you allow building a good relationship with your customers.
The best thing to do: Build your reputation as a business, start by offering senior citizens and students special discounts. Never underestimate the power of the word of mouth, doing so encourages them to tell friends and give you more prospects. Note that good image to your business is everything.
5) Will discounted items help my business?
It’s not entirely unhealthy for a business to use discounts as a strategy to skyrocket your sales. This depends on your plans as a business owner or partner. Keep in mind that intelligent discounts can help your revenue grow. Discounts that tell customers you can save money by patronizing them is a clever one. Getting their trust also adds to your basket points. So, what you should think of is the welfare of your business and more importantly your customers. It’s a win-win decision.
The best thing to do: Review the pros and cons of your discount strategy. There are easy-to-do discount strategies for startup business that is of big help. If your business would benefit from the strategy, then by all means, proceed captain. It all boils down to making smart business decisions.
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