Understand why discounting may negatively affect your business, and what you can do instead.
Do you ever ask yourself what your customer actually wants when they walk into your store? What are they looking for? Stuff?
Are they looking to have excellent customer service? To save money? Or have an out-of-body experience in zero gravity, underwater surrounded by schooling whale sharks, dolphins playing, and turtles riding the East Australian Current?
These customers of yours, they want something, and what they want is more than just “stuff”.
They are looking for value.
That is correct. Value. You’ll be seeing this word a lot today. While most retailers think that by making things cheaper they will be able to close the sale easier because people focus a lot on cost, well, that’s just lazy selling. If that is the way you want to sell – go ahead. However, the long term damage to your business that discounts may cause is not worth it, and here is why.
You’ll need to sell more to break even – a lot more.
Did you know that if you discount an item by 10% your net profit would likely be negative 15%? In which case you would have to sell 25% more of those things you just discounted just to get back to where you were. There are exceptions – say if you are getting rid of a line or phasing out a model – but don’t do it just to land the sale and close the deal.
It’s a bad precedence. Believe me. You offer up a once a year special deal and now it becomes the norm. “Oh, I have special pricing, just ask Larry” is now a thing. “Hey, last month you gave me 10% off my wetsuit, I want to get another one for a friend, can you extend that deal to me again?” As soon as you lower that price, your customer will expect to see the same price next time. Or worse, they’ll hold out until you offer another “special deal”. And most likely, they won’t purchase from you without it.
You now become that “Sales Guy” you never wanted to be. The sale is on the table and things go south. You have already made mention that this is the absolute best that you can do for them and it is a great deal, yet they still aren’t convinced and are about to walk out the door – perhaps to head to your competitor down the road or worse, go online!!! What do you do? You break down and discount even more in order to close the deal and keep the customer. But what just happened? Right about now that customer is thinking, “Didn’t they just say this was the best they could do and then went even lower? What else are they trying to sell me on as ‘the best they can do’ that they aren’t telling me?”
You and your product lose value.
This one is the worst. No wonder people are signing up for $99.99 courses and buying discounted equipment online. The perceived value isn’t there when all you are talking about is price and how much you can lower it for them. You are about to train people on how to stay alive underwater and sell them equipment so they can breathe without dying. What’s the value of that? Check out our webinar on selling benefits over features to understand how to bring more value to the products and services you sell.
I cannot be any clearer – discounts are not going to help you unless you are looking for a boost in sales that will last you a few days and allow you to witness a spike in your numbers, but that, my friends, is all you’ll get out of that. Rather than discounting your products and services focus on the following:
Give Value. Give your customer value! Sell the benefits of how the thing will make their life a better life. Sell them the experience of going through an effortless and enjoyable sale with you and your staff. Sell them the trust that they bought a product that you are going to stand by and if something goes wrong – you will make it right. Sell them the idea that they have made an investment and not a purchase.
Add perceived value on top of value. Offer them your time. Offer them customer service, and offer them something that you know costs you little, but has a lot of value to the customer. Remember, people do not mind paying more if they see value. If people didn’t want to pay more, Rolex, Mercedes, Versace and all the other ridiculously expensive brands would not exist.
Sell confidence Please do not confuse arrogance with confidence, in this industry it is a lot more common than you think, and a HUGE turn-off to those around you, and it can be especially intimidating to someone just coming into this sport. But confidence on the other hand – it is infectious, just as excitement is. Tell them all the awesome things they can do at 40ft and all the amazing things they will see, and with additional training and equipment, you can take them even farther and to more remote places like Galapagos or a wreck at 120ft. People will want to buy from you.
Stand by what you are selling.
Earning trust is something you will have to do every day yet you can lose it in a matter of seconds – then, it’s bye-bye. As soon as you lose a customer’s trust they will more than likely never buy from you again unless they absolutely have to. You want to make sure that what you are selling – you can deliver. If this is the most incredible BC available you need to explain why and then focus on how much it will improve their diving experience. Remember, it is about them and what you can do for them. The last thing you want to do is leave them under the impression that all you are trying to do is clear inventory. If that is what you are trying to do – tell them that. They will appreciate it
So stop discounting. Don’t make price the issue – you do not want to attract those customers. You do not want to find yourself negotiating every time you are at the cash register. You also don’t want to be known as the person that people go to for cheap things, do you? You own a Dive Center – not a Pawn shop.