I’ve written before (I’m too lazy to link to it) how I hate offering discounts to new customers — I think it devalues your offer. Likewise, I’ve written (still too lazy to find the link) how I love offering discounts to customers — it’s a great way to thank people for their support and create loyalty.

I’ve lived by those thoughts my entire career.

Last week I was twice asked about my thoughts on discounts as they relate to sales and promotions. And despite my beliefs above, I twice recommended a sale be tried as a test. As much I don’t like new client discounts, I believe more in testing.

The recommendation I separately gave both clients it to test a promotion, as long as it contains two elements: 1) a natural event 2) a time limit.

My reasoning behind the recommendation for caveats on the promotion

The natural event means there’s an actual reason for the sale, not just something random. The limit in time means it’s an offer that expires at a certain date and time. The thought is to offer a discount tied to an event of sort and limit the time to take advantage of the offer to not jeopardize your normal price structure.

What you want to do is test the price of your offer as motivation to purchase without cheapening the value of your product or service in the eyes of those who purchased at the non-discounted price.

It can be tricky

Sales and promotions can be used to test price and packaging of products and services. In that vein, they are a good thing to do. What you want to be cautious of is offering discounts at a frequency that makes them a norm, resulting in a client-base that waits for the next discount to purchase. Companies do that all the time, leading to back-ended quarters and effectively lowing the street price of their products and services.

So, if you want to offer a sale to boost activity in your business or test a new offer, feel free to do so. My advice is to first look at existing customers to test your offer and secondly limit the offer as suggested above.

What are your thoughts about sales, promotions, and new client discounts?

-------

Don't miss an update. Subscribe to our blog and newsletter!