Discounting is a strategy which is commonly used to stimulate sales – especially in the retail industry.
However, discounting can be a dangerous game which can lead to long-term erosion of profits, devalue a product or service, and may be completely unsuitable for some industries altogether.
Here are 5 alternatives to discounting you may like to try:
1. Create Scarcity
Price is influenced by supply and demand. Restricting supply, and more importantly, letting people know about it, can be a powerful way of encouraging people to buy even if there is no discount available.
Scarcity taps into people’s fear of missing out, therefore forcing them to make a decision as soon as possible.
Manufacturers can use scarcity by creating limited production runs.
Service-based businesses can tap into the natural scarcity that is built-in to their business. For example, restaurants and movie theaters only have a limited number of seats and can advertize how many are available or remaining. A dentist or accountant only has so many times available in their calendar and can let prospective clients know how many spots are left.
2. Create Exclusivity
People love to feel special and are often drawn to things that ‘not everyone else can get’. You can appeal to this by creating exclusivity in your product or service.
You may design your business so only certain people who meet some sort of criteria will be able to purchase your product or service.
For example, night clubs do this by only letting people who meet a certain dress code (or in some cases, only letting in ‘attractive’ people). Some financial planners only take on board clients who have certain amount of investable assets. Some training organizations will only let you enrol in a class if you meet certain prerequisites. Some places will only let you shop if you are a member.
Another benefit of using exclusivity is it allows you to screen for better customers, therefore making your business more enjoyable to work in.
3. Remind Them Of Their Pain
Many prospects don’t buy at full price because they become accustomed to the status quo and don’t feel the pain or urgency of their problem any more.
Reminding them of the seriousness and urgency of their problem can help move them across the line and compel them to take action to find a solution.
For example, let’s say you sell ergonomic office equipment to a prospect who is using a cheap desk and office chair. They are uncomfortable but have been using it for so long that they just ‘put up with’ the aches, pains and loss of productivity by their office equipment.
You can simply remind them of the cost and trouble of their current physiotherapy visits for back pain and shoulder pain, remind them of the aches and pains they feel at the end of every day being cramped in a bad position all day at work, how it makes them feel tense and ‘sluggish’ and how these pains end up hurting their focus and productivity at work.
If your prospect has forgotten or simply become ‘okay’ with their problem, remind them of the seriousness of their problem and show them how they can solve it by buying your product or service.
4. Show Them The Consequences Of Inaction
Another way to motivate people to buy now is to show them the cost and consequences of NOT buying.
This allows you to demonstrate the value of your product or service and justify why it is worth purchasing now even at full price.
For example, if you are a dentist, someone may not feel like shelling out $5000 for braces. But if you remind them that leaving the problem will impact their smile in photos, their first impressions in professional and social settings and also cause costly health problems down the road like tooth decay and gum disease – they’ll be far more likely to realize that they are worse off every day they delay the decision.
5. Add Bonuses
Another powerful way to stimulate sales is to offer bonuses with the main product or service you are selling.
For example, if you are selling cars, you may offer 10 free car washes with every new car purchase. If you are selling paintball guns, you may choose to offer a free protective face mask. If you are a financial planner, you may arrange a free tax consultation with a trusted accountant in your network for someone who chooses to work with you.
Bonuses help create a higher perceived value of your offering, therefore making a purchase more attractive and justifiable.
When using bonuses to stimulate sales, try to use bonuses which have a low ‘hard cost’ but high perceived value.
For example, a car wash may only cost you $10 in labor and materials to fulfill but may be normally sold for $40.
This allows you to increase the perceived value of your offering and stimulate sales without eroding your profit margins too significantly.