When Should You Offer Discounts To Customers?

We often say in our messages that by offering discounts to customers, we only succeed in devaluing our products, rather than increasing their value.

However, are there some circumstances where offering a lower price may actually be an advantage to us? Can we trade a discount offering rather than conceding our position?

Well, there are some situations where offering a discount may be a practical option.

Here are some of them:

Higher order quantity:

This could give customers reasons to buy more products than they might normally, encouraging them to build stock or create opportunities for more sales. For example, you may decrease prices by a certain percentage for a higher order level.

Higher total order value:

By setting higher price points and offering discounts at these points may encourage customers to think about how they are going to be using your products in the future.

This is a direct focus on money, which may suit customers more than a quantity discount. It can also be used to target psychological price points.

Strategic Customer base:

You may have a customer who it is vital is well-served and encouraged to do more business with you. A discount may maintain their business with you for the future.
Also, there may be specific points where you provide a higher discount to encourage higher purchase levels in the future.

And if having a specific customer offers you good marketing bragging rights in the future, you could see fit to offer discounts for this strategic intention.

To keep customers who may leave you:

If you hear about one of your customers who is being groomed by a competitor, it may be appropriate to work with them to decide if discounts could be a persuasion mechanism to keep them.

Be aware, though, that you may be setting a precedent for the future and run the risk of them thinking they only have to threaten you with a competitive offer, and you will beat their door down with special offers.

Change the timing of purchases:

You could influence customers to take an early order by offering short-term discount offers.

This can be useful for sales which are relatively impulsive and where customers do not really need to make the purchase. It can also be useful when you have a sales target and need to get the sale completed in the short term.

Quicker settlement terms:

This could be offered to a customer who could pay earlier than expected. For example, if you offer T&Cs that amount to a 30 or 60-day credit, a quicker settlement of terms may be offered so you get a quicker return of outstanding monies owed.

Additional Promotions:

There may be times when a short-term promotion can be backed up with extra discounts up front.

If you find a competitor has a new product coming out and its marketing is making an impact on your business, offering some form of reduction could still keep the interest of current customers.

Timing of Sales:

End-of-season sales, end-of stock discounts, Black Fridays, seasonal sales and the like, offer opportunities to offer stock at a lower price.

It could be you offer some specific range or type of product at a lower price or a catch-all product type discount offer.

Be aware of becoming like those retail stores who offer discounts on stock all-year-round, where the ‘recommended price’ is rarely, if ever, charged.

Offering discounts may build sales for you over the short-term, but also be aware of the impact that reducing your prices may have on future business revenue. The lower your prices, the more you will have to sell to maintain profitability.

So, be prudent with any offers you make so you aren’t setting yourself up for having to repeat offers again in the future when it may not be appropriate for you to do so.