Quit Killing Your Business: Preserve Your Profit Margin
I’m not very good sitting in an audience. Sitting’s not my thing. But I’m especially bad at sitting still when there’s a business consultant on stage telling independent business owners that their best shot at bringing customers in their doors is to discount their products and services.
You see, I was speaking at a conference, had some time between my sessions, and wanted to hear this consultant’s take on small business success, but I wasn’t in my seat 3 minutes and he starts telling the owners in the audience that a great way to bring people into their businesses was to give a “tax-free” day to customers, and discount their prices by the percentage of their tax rate.
Now, I’m not saying this technique won’t work. It will. But so will discounting your product 20%, 30%, or even 50%. But why stop there? If you really want to attract thousands of customers in a single day, just give all your products away for free!
Nobody wants that, do we? Yes, we want customers to come in our doors, but we want them to pay a fair price so at the end of the day, we’ve made a profit and we’re making a living doing what we do.
But that starts with understanding the downside to price discounting.
Business owners are mistakenly giving up critical dollars that their businesses need to survive. I meet owners every day that have gone down the road of constantly offering discounts, but who also complain to me at the end of the year that they’re not generating a profit.
Folks: Heavy discount marketing = a profit poor performance.
Plus, the more businesses discount their prices, the more their customers are trained to wait for the discount. (Think Kohl’s, Bed Bath & Beyond, and Sports Authority).
Oh, wait: Sports Authority just filed for Chapter 11 bankruptcy.
There are smart ways to market a business with price discounting, creative methods that don’t hit your bottom line so hard, and in many cases, give the customer a feel that they’re getting a great deal, while really not giving up very much profit margin at all. I have webinars in DestinationUniversity.com, our business owner training network, on this topic. But for now, remember these basic tenants on discounting:
- Every customer wants good value these days, but not all customers need a discount to purchase.
- Discount marketing attracts the least loyal consumers who are most likely to desert your business when another business discounts more.
- These same discount-oriented customers generally spend less money and demand more attention than more profitable customers.
- Bottom-line reality: The more you discount, the more bottom-feeders you’re going to attract.
Want to minimize your price discounting? It starts with focusing on making your business distinctive, specialized, and one-of-a-kind, focusing on unique products and specialized services that people haven’t seen before.
Or as I like to say: Creating customer insistence by becoming a Destination.
Only 4 Seats Left
We have only four (4) seats left for my April 19-21 Destination BootCamp, where you can learn to implement my entire 14-step strategy that turns your business into a Consumer Destination, equipped to entice customers from hours away.
If you’re not familiar with Destination BootCamp, click on www.DestinationBootCamp.com and take time to read the nearly 200 testimonials from business owners just like you, who write about how Destination BootCamp has accelerated the sales and profitability of their stores, sometimes by hundreds of thousands of dollars!
This is the fourteenth year I’ve been doing the BootCamp. We’ve nearly run 1,000 business owners through my process.
I know you’ve thought about attending. Why haven’t you?
Don’t miss this chance to transform your business. Make the commitment to come to Colorado and attend one of my 5 Destination BootCamps in 2016.
Until next week,