Emphasize the virtues of your product or service, rather than the price. It will keep your competitors at bay, and your customers close.
As business owners, we are often tempted to discount our product or service, thinking it will somehow win us customers and drive growth. Customers are relentless about asking for discounts too, believing that getting something cheaper is better. Whichever perspective you look at it from, discounting is not only dumb, it's dangerous.
You'll cut corners.
Even if we try to look past it and keep our eyes on the far-off prize of increasing sales, the reality of discounts is that they require you to take a loss. If you discount your product, something has to get cut. Perhaps you will change the way your product is crafted, and use lower quality materials to make the discount work. Perhaps you will have to reduce the level of service you provide, or the speed with which you deliver orders, all in the name of the discount. While this strategy may result in a quick burst of sales, it will also burn your customers. A customer who receives a sub-par product may be happy with the discount—until she opens the box and has buyer's remorse. And when she does, you can rest assured, she will let other potential buyers know that you sold a product that did not meet her needs. Rarely will she mention that the product was discounted, but instead only that it was not what she thought she was getting. That discount has now cost you not only money, but reputation as well.
You'll invite competitors to attack.
Discounting is generally a sign of distress—and one that is easily readable by your competitors. When businesses are having trouble converting prospects to customers, they look to discounts to win business. When cash flow is in jeopardy and a company needs to balance books quickly, discounts are often used to create an emergency influx of funds. As word gets out that you are discounting—and it will—any good competitor will come on strong by lowering prices in kind, further undercutting your chances of growing your business or stabilizing revenues.
You'll reveal a lack of confidence in your product.
Price is the weakest of all attributes to use when trying to sell your products, because any company can meet or beat your pricing either temporarily or long-term. If you lead your sales with a discount or promotional offer, it sends a signal to your customer that your product has no better attribute to distinguish it from competing products. You may actually have the best product on the market, but by offering it at a discount, you are not only discounting it, but also devaluing it. Discounts proclaim, in a silent but deadly manner, that what you are selling is worse than, or at best equivalent to, the product of your competitor—and customers are smart enough to know it. Relationships are built on the confidence your customers feel in your products, and the assurance they get from buying what they know to be quality. Discounts wipe out these two brand essentials and leave your business in a very risky position in both customers' minds and the marketplace.
So the next time you are ready to head in the direction of discounting, consider your choice carefully. You surely have a better reason to convince customers to choose your product. Focus on articulating the why of your product instead of the how much. It will keep your competitors at bay, and inspire your customers to stay close.
In 2004, VANESSA MERIT NORNBERG opened Metal Mafia, a wholesale body and costume jewelry company that sells to more than 5,000 specialty shops and retail chains in 23 countries. Metal Mafia was an Inc. 500 company in 2009. @vanessanornberg