As a business owner, not a day goes by when you don’t think about increasing your sales numbers. That’s totally normal and totally healthy – who doesn’t want more revenue?
When I’m talking to clients about growing revenue, one of the first things most of them think of is to offer a sale. 10 % off, “Buy One, Get One Free”, etc. Though the discount/sale strategy is common, it’s the wrong move for most small businesses. If you’re considering running a sale in the near future, I urge you to reconsider. Here are the two major reasons why:
Sales detract from the value of your products and services. Let’s say you offer a widget for $100, but you’re currently running a sale in which you offer it at $75. Now imagine a customer sees the sales price, but doesn’t buy it because he doesn’t have a need at the moment. Two weeks later, after your sale is over, he realizes that he does in fact want your widget. Now, however, the list price is $100. Because the prospect initially valued the widget for $75, convincing him that it is in fact worth $100 is a difficult proposition.
Sales attract the wrong type of customer. In order to build a business that is successful and sustainable over the long run, your goal should be to attract loyal customers that appreciate the value you provide. Over time, these customers will come to trust and depend upon your products and services, and they’ll become repeat customers. On the other hand, offering rock-bottom prices primarily attracts customers who are interested in saving a quick buck. They won’t appreciate the value you offer, and are highly unlikely to continue to purchase from you once your price returns to normal. Catering to price-conscious customers (which is what a sale does) leads you down a path where the only way you can sell products is to slash your prices. Pursuing customers who appreciate the value you provide, however, builds long-term loyalty.
Except for rare exceptions, slashing prices is a bad idea for small businesses. Contact me today if you’d like to discuss your pricing and promotions strategy in depth!