Back to PodcastThe Proper Way to Use Discounts Brief Overview Last week the Black Friday bonanza was exciting as a customer. But there is a serious downside to consider as a business owner. In this episode I share the proper way to use discounts. Download as an MP3 by right clicking here and choosing “save as.” RSS feed for Marketing Your Business Big Ideas Using Discounts to Attract the Right Customers [0:59] When Black Friday happens, there are all kinds of big offers being put out there by different businesses. People are significantly discounting their products, from $2,000 down to just a few hundred bucks. I saw these huge bundles where thousands of dollars were discounted up to 95% off, and it was crazy! Typically, we all experience this from a physical product standpoint. However, when it comes to more intellectual property like courses, membership sites, consulting packages and services, it gets me thinking about two things. Number one is when you steeply discount your products, what kind of customers are you expecting to attract with this offer? Are you going to attract the kind of customers that will buy from you again and again? Or are you going to attract the discount shoppers, the people who have zero loyalty? The only loyalty they have is the price, so they’re just going to shop and buy the most steeply discounted products and services, which is a game that you and I don’t want to play. The Ripple Effect [2:45] Number two, what does this communicate to my existing customers who paid full price? One of the biggest mistakes I saw happening over Black Friday was people steeply discounting $2,000 courses to a few hundred bucks. Think about what that communicates to those customers who purchased the same course full price a few months ago? You got to think about the ripple effect of offering discounts. When you offer discounts, you train people to always wait for it, and you inconsiderably tick off your existing customers who paid thousands more for your offer. The lack of long-term planning when it comes to these kinds of Black Friday discount offers is crazy to me. The excitement of Black Fridays makes us ramped up for that short-term burst, but I think it can do more long-term damage than anything else you can possibly do with your business. Treat Your Existing Customers [4:35] There is only two ways in which I would recommend offering a discount. The first way is if you have an offer to existing customers to buy more of what they already bought from you. For example, my wife and I use the service called Flytographer. It’s great for when you want to get photographs by a professional photographer wherever you may travel. We used the service for the first time last summer in London, then again later my wife used it on her trip through Morocco. On Black Friday, they sent us an offer to buy gift cards for their service with 20% off. This offer only went out to existing customers, and what’s great about it is that as an existing customer, you really see the value of it. Additionally, it was positioned to be able to share those gift cards with others. Reward Your Early Buyers [6:49] The second way of offering a discount that I would recommend, is if you have a new program that you are about to roll out. Instead of waiting, use Black Friday to beta launch this and get it out there in a discounted way so that you reward your early buyers. That shows you want to reward the people who take a chance on you early, so that their investment gets more and more valuable as time goes on. For example, the people who joined our high-level membership and coaching program (Connect), during the first founding member stage will be rewarded with the lowest price ever for the lifetime that they stay with us. Of course, we were going to raise the price over time because the value will go up significantly, but our early customers will be rewarded the most. A great example of using a discount when you are rolling out a new program is Brian Harris. Brian launched a new program called Partnership Accelerator on a price discounted from the one they will roll it out on a regular basis. It rewards the people who get in on it early, and that’s a winning recipe. You only discount in the beginning for your founding members, showing them how much you care and value their interest. Form the Right Perception in Your Customers’ Minds [9:20] That’s the only two ways I’d recommend offering a discount. Every other time that you would do it, I think it creates long-term damage in your business. It trains your audience to wait until you discount, attracts the wrong kind of customers, and damages the relationship and the perception of your products in the minds of your existing customers. Memorable Quotes “Offering discounts trains your audience to wait until you discount, attracts the wrong kind of customers and damages the relationship and the perception of your products in the minds of your existing customers.” – Stu McLaren Rate & Review the Podcast Reviews for the podcast on iTunes and greatly appreciated! They help us build awareness for the show, which in turn allows us to bring value to more listeners like you. Not only that, but they help us better understand what matters the most to you so that we can constantly improve. If you received value from this episode, it would mean the world if you could take a moment and leave your honest rating and review. You can do that by clicking here.