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Are Discounts Worth It?

Posted on Thu, January 1,2015 @ 12:22 PM

At first glance, pricing discounts are all about perspective. The typical consumer greets them with a “yea,” the seller a “meh.”

Sellers’ hesitance is likely more due to the challenge of rolling out and managing discounts, not the actual impact they have. You don’t need to see the lines camped outside of Best Buy prior to Black Friday to know that discounts work.

Assuming your lean, nimble organization is committed to testing discounts and has the tools1 to carry it out, there are a number of goals you can achieve through pricing "deals," whether you are a program or event manager or a retailer.

Introductory Promotion
Offering a discounted price on a product or service at the beginning of its life cycle can create a buzz that drives demand. For instance, you might launch a new series of events at a discounted, “introductory” price from your typical events. Once customers discover the value, they will likely be willing to pay more for the event (e.g., your typical price) down the road.

Increase Short-Term Sales
If your programs or events have a slow season, discount pricing is an effective way to increase your sales for a short period of time. The goals is to increase sales volume – with discounts as the “carrot” – that help revenues exceed what you would normally achieve in that slow period, even with the lower pricing.

Fill Your Weaker Events
Some programs and events, for whatever reason, aren’t filling seats but instead filling the wrong column on the P&L statement. One effective way to sell your less attractive offerings is to discount them. Again, the goal of discounts is to create a revenue scenario [higher volume X lower price] that exceeds your existing situation [lower volume X higher price].

Reward Your Loyal Customers
Customers love to feel loved. So, show them some appreciation. Reward loyal customers by offering them discounts once they reach a certain spending limit or participation level. This is a great tool to persuade customers to stay loyal to you as opposed to shopping elsewhere for programs or events. Think of it as your version of retail’s reward cards.

Market Penetration
Let’s assume you aren’t the only organization in the region offering volleyball camps or cooking classes or an annual motivational conference. If you want to increase your market share for that targeted customer base, consider discounting your events that go up against the competition. You will likely attract new customers to that particular program or event – customers that may one day sign on to more of your offerings.

Creating Brand Loyalty
If your brand is in need of a loyalty boost, consider discounting. Offering reduced pricing on your next program/event might be just what you need to retain customers and make them come back for more of your offerings.

Get an Edge on the Competition
If a discount gives you more competitive pricing, your customers are likely to see more value in your offerings versus the competition. It’s not brain surgery, though too deep of a discount can have the opposite effect. You can gain leverage in your industry or niche – and possible market penetration – with discounts designed to beat the competition.

Loss-Leader to Sell Something Bigger
One way to sell an entire series of events is to offer the first one at a deep discount (or even free), with the expectation that once the attendees recognize the value of the program, they will purchase the entire series of programs/events. Think how big box stores offer an amazingly cheap TV (that’s already out of stock when you get there) to get you in the store, where you will be exposed to far more expensive items. Well, that with a slight exception – you actually provide the event being discounted.

As you can see, there are several good business reasons for offering discounts. The type of discounts can vary according to the objectives listed above (e.g., price cuts to beat the competition, next event discounted to build loyalty, or even “Xth event free” for loyal customers). Similarly, even the depth of the discount and how it’s presented should align with your objective. Pricing is an art in itself – and a topic for another day.

One thing to always be conscious of with discounts – if you go to the well too often, you risk market position (do you want to be considered the discount provider?), brand loyalty (customers thinking your initial price is never the “real” price) and potential sales (customers always waiting for the discount before signing up). Also, if your discount is too complex, you risk confusing customers and potentially losing their business.

If you have tips on how you make discounts work for your programs or events, feel free to tell us about them in the Comments section below. If you would like to know more about ABC Signup, registration software or how to set up discounts using registration software, please email or call us (866.791.8268 ext. 0).

1Customers using ABC Signup can create any number of discounts using the registration software’s robust pricing/discount functionality.



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