You just got a coupon in the mail - wow! 50% off! You rush to the store and score a killer deal on a new whatsit by Whosis Electronics – you've wanted that one for months. Basking in the warm glow of zero buyer's remorse, you decide to go back and look for other items in your mental shopping list.
Next visit, you see sale items, but discounts are a paltry 10% or 15%. After 50%, all the prices seem too high, and there's the rub: Your expectations were set based on your first purchase.
This can become a trap and, worse, a habitual way of doing business. I'm going to talk about Kohl's and, to be sure, I shop there often and like their stores. I've noticed they always seem to have (guesstimate here) roughly 50%-70% of their merch on sale. It makes me skip regular priced merch and, worse, think their retail prices are artificially high so that any sale item seems to be a bargain. They seem addicted to sales with crazy discounts.
I see companies having 50% off sales. If you're in an inventory or tax crisis, sure, it makes sense. Short of a crisis, it devalues your image and overall value in the customer's eyes. They ask, "If you can discount 50%, then are your regular prices too high?" It also makes customers wait to see what your next sale is going to be if they are loyal; if they're not, they're going to shop you to death.
So, what about Groupon, which so many people are saying is the next wave? Well, ask yourself this: When I buy, do I look for value or the cheapest price. You might say, "That depends on the item or service," and indeed it does. But go one step further and ask: Which builds real, true value in the customer's eyes, coupons or being the best at what we do? Obviously, the latter.
Your competition might be discounting like crazy, and that means they might be addicted to coupons. They're trying to make up lost margin in volume, but that's a plan with diminishing returns (and that's a whole other post for later). Sure, every now and then, coupons are a good idea, but be very, very frugal. Build value with customers first, then discounts seem like a reward, not a desperate move.
Next visit, you see sale items, but discounts are a paltry 10% or 15%. After 50%, all the prices seem too high, and there's the rub: Your expectations were set based on your first purchase.
This can become a trap and, worse, a habitual way of doing business. I'm going to talk about Kohl's and, to be sure, I shop there often and like their stores. I've noticed they always seem to have (guesstimate here) roughly 50%-70% of their merch on sale. It makes me skip regular priced merch and, worse, think their retail prices are artificially high so that any sale item seems to be a bargain. They seem addicted to sales with crazy discounts.
I see companies having 50% off sales. If you're in an inventory or tax crisis, sure, it makes sense. Short of a crisis, it devalues your image and overall value in the customer's eyes. They ask, "If you can discount 50%, then are your regular prices too high?" It also makes customers wait to see what your next sale is going to be if they are loyal; if they're not, they're going to shop you to death.
So, what about Groupon, which so many people are saying is the next wave? Well, ask yourself this: When I buy, do I look for value or the cheapest price. You might say, "That depends on the item or service," and indeed it does. But go one step further and ask: Which builds real, true value in the customer's eyes, coupons or being the best at what we do? Obviously, the latter.
Your competition might be discounting like crazy, and that means they might be addicted to coupons. They're trying to make up lost margin in volume, but that's a plan with diminishing returns (and that's a whole other post for later). Sure, every now and then, coupons are a good idea, but be very, very frugal. Build value with customers first, then discounts seem like a reward, not a desperate move.
No comments:
Post a Comment