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How to provides buying incentives without discounting

Guest post by: Craig James

Article Overview: It's not always necessary to cut price in order to win business - even in this economy.

How to provides buying incentives without discounting

In tough economic times, there’s a constant concern that customers will pull in the reins and make fewer purchases. If you’re Wal-Mart or some other commodity seller, you can simply drop your price to drive more volume, thereby maintaining your current revenue levels. But if you sell a premium product or service — one where the premium value of what you offer is conveyed in part by a premium price — “discounting” is inconsistent with the brand promise you’ve made to your customers. For example, Nicole Miller was selling her ties for $65 when the rest of the world was selling ties of comparable quality for $25-$45. She never discounted — not even during slow periods. To do so would have removed the cachet that was the hallmark of her ties and moved them toward the realm of the ordinary tie. This would have deprived her of her unique selling proposition, and made it difficult, if not impossible, to return to the premium price she’d established once things got better. How then can we induce skittish customers in an uncertain economy to continue buying without discounting? One way is to offer to stretch payment over a period of time. You accept a down payment, and allow customers to pay the balance in installments (say, monthly for the next six months). This eases the payment burden on customers by lowering the current cash outlay (but not the price), which will motivate some customers to buy who otherwise would not have. Of course, you are implicitly discounting (forgoing the time value of money), but it’s not perceived as such by customers. One note of caution: By using this tactic, you are effectively financing the deal, and in doing so taking on the risk of non-payment.

A second option is to offer a deal, such as buy two, get the third for half-price. Constructed properly, this incentive will help you maintain (perhaps even increase) unit sales and revenue, with only a slight hit to your margins. And, as in the first example, it will not be perceived as a discount, but rather as a deal.

Another incentive that will keep customers buying but won’t look like discounting is to provide customers with a coupon after each purchase toward a future purchase. From an accounting perspective, your margins will suffer with this tactic, but it will be consistent with your desire to maintain sales. Along the same lines, you might also provide a coupon or discount for referring a friend. This is a commonly accepted tactic used by e-mail marketers.

Lastly, if your offering is a bundled one (you get this, that and the other thing for one price), and you’re able to unbundle it, do so — and let customers buy the (lower-priced) components they need. For example, if an accounting firm typically quotes clients a price that includes both tax and audit services, they can unbundle by offering clients the option to purchase services for tax returns only. You’ll make less per sale, but you’ll give your customers a reason not to stay away.

There are many ways to keep your customers from putting off purchases of your product that don’t require overt discounting. For more ideas, just look around at what retailers did this holiday season. Great ideas abound — if you know where to look.

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Article Tags: discounting, price objection, sales objections



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