Why I’m afraid of discounts

We all like them, as long as we don’t have to give them. Discounts. An easy, short term way of boosting your sales, but a sure way to get a headache.

money

From a customer’s point of view I can understand the logic. If I bought something for $15 and the next day it’s on sale for $10, I’d be pissed too. The company should inform me better if they’d planned on giving discounts, especially when I’m a loyal customer. They could charge $10 from the start. They could give good customers an early discount.

Customers see discounts as a way to reward their loyalty, while in most cases they aren’t. It’s just an easy way to solve a problem. The problem being overstock, a new shipment coming in, low sales,… There are going to be few marketingplans that have ‘discounts’ in the marketingmix from the start. First they’re trying to sell at the normal price and if it doesn’t work… discounts. Someone who already bought the product feels cheated, starts to complain, loses his trust in the company and in the end delays any further purchases to the very last moment, just in case there’s a discount around the corner.
As a result, companies have a hard time predicting how sales are going to evolve and if they’re going to make a profit. If lots of customers keep waiting they’ll get what they want, a discount, but at the cost of the company, who sees no other solution but to dump everything desperately trying to salvage what remains.

It’s not that companies don’t want to announce discounts, it’s just that they don’t know if they’re going to need them. It’s not a sign of ill-faith, bad customer relations or anything else, just trying to make a living, like anybody else. Giving discounts is a sure way to do a few things:

Create a short term succes

Give a long term headache