Not all discounts are bad

The previous articles focused on the negative consequences of discounts. Now, let's talk about when it's appropriate to offer discounts.?

The world is not black and white, so we must make some judgment calls when dealing with clients. At times, you may second-guess yourself because every situation is unique, so do the best you can, and don't sweat it.

Here are some occasions when a discount is appropriate.?

You are testing out a new product or service

If you are in the test phase of something new, you need to test it out and work out the bugs, so a discount is appropriate. Then, once you have your product or service fine-tuned, you can charge full price.?

As compensation for a mistake

The famous and highly-respected restauranteur Danny Meyer sums it up best. "Ensure the value of the redemption exceeds the value of the mistake."?

Here is an example from when I was a chef to illustrate this point further. If I overcook your steak, the bare minimum you expect is that I fix that mistake. Would you feel satisfied if I cooked you a new steak and did nothing else? You may be OK with it, but I doubt you'd leave feeling "wow."?

Well, I want you to feel like, "Wow, these guys went above and beyond."?

So, how do I do this? Take it one step further. Of course, I'd cook you a new steak. But what if I apologized and offered you a free glass of wine or dessert as well??

You would feel even better, right? Not only did I fix the mistake, I took extra steps to ensure you felt taken care of.

The last thing you want is for the client/guest to leave feeling like you just did the bare minimum because you felt you had to.?

Sometimes you gotta bite the bullet

Sometimes things happen out of your control that may not be your fault. Sometimes it is in your best interest to accept responsibility for the sake of the customer.

Here is an example from my time working in hotels. Customers complained about the noise from the construction across the street. None of this was the hotel's fault and was out of our control. So, what did we do? We offered discounts to the guests who were dining at that time.

The logic here is simple. Do everything possible to ensure your customers have an enjoyable experience.?

Don't get caught up in the mental gymnastics of who is right and who is wrong. Don't let your pride get in the way. It is not always about who is right. It is about the customer's experience.?

You are new to the marketplace

How often have you received a flyer offering a discount for a new restaurant or store? Discounts are an excellent way to get attention and initial traffic to your business.?

Warning: Discounts can attract the wrong audience. Some people live off of discounts and early bird specials. It's what we in the restaurant industry call "Cheap Charlies." Trust me; you don't want that demographic.

You can also use discounts to target a specific audience. Offer a discount to those working in the same industry, or same shopping center, zip code, and so on.

When hosting a webinar or some other event

Take advantage of a captive audience. I purchased two discounted courses on LinkedIn after watching a live webinar. At the end of the webinar, they offered a discount for any of us who participated.?

This is a great way to boost your sales.

The need to eliminate inventory

This applies more to a business that has physical products. Stores often discount products they wish to eliminate from their inventory to make room for new products.?

In closing

The biggest lesson I have learned is to use discounts carefully and strategically. When setting up your business, create a discount policy and stick to it.?

Don't be afraid of offering discounts when appropriate. Whatever you do, don't use discounts as a knee-jerk reaction for fear of losing a client. That was my old approach, and it is just not worth it.

Over and out. Curt