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The Number 1 Discounting Mistake Marketers Make

Plus, How to Retain Members Longer

The number one discounting mistake most marketers make is giving a discount for NO reason as this automatically devalues your product. And here’s why …

Do you remember the studies done on the word, “Because?”

They had their researchers try to cut into a line of waiting people.
Sometimes the researchers said, “Can I cut in front of you?”
And other times they said, “Can I cut in front of you because I’m in a hurry?”

Notice the reason given is rather lame. You can assume from the first question that they’re in a hurry. But the point of the study was to see if using the word “because” made a difference, and it did.

The #1 Discounting Mistake Marketers Make

Something like twice as many people allowed the researcher to cut in line if they used the word “because.” This even worked if the researcher said, “Can I get in line ahead of you because I want to?” That might be a dumb reason, but it still worked.

Sooner or later, you’ll be running a sale or a discount in your online business.
Hopefully, it’s sooner because discounts make a lot of sales. But here’s a discounting mistake you may not be aware of: If you run a discount without giving a reason why you are devaluing your product.

“I’m discounting the XYZ product today only!”
Yes but… why?? Is the product now worth less than before?

Let’s say you’re creating a new course. Offer a discount for people who buy the course BEFORE it’s available as a reward for trusting you or because you want their input. Give your readers a week or two to sign up before the launch at the discounted price and you’ll make lots of money upfront.

You’re discounting because they are early birds.
Once it launches, it will be at full price, and you will never discount it again.

Well, actually you will.
Let’s say your course will launch at $199 but your pre-launch discount is $99. Once your course launches, you will never again sell it at $99. But you can raise the price to $399 when you update the course, and then later discount it for a period of time back to $199, as long as you give them a reason.

See how this works?
Giving a reason for a discount is hugely powerful because it validates the price for the customer and it doesn’t devalue the product.

Reasons to give a discount

It’s a holiday, your birthday, you’re migrating your website, you’re celebrating the birth of your baby, you’re buying a new home, it’s the one-year anniversary of your product…
Really any reason can work.

Just be sure to limit the time of the discount, such as the next 48 hours or 5 days, and always give a reason why you’re doing it.

When I Refuse to Discount

One thing I don’t do is discount something because a customer asks me to. That’s just my personal preference. If you choose, you can negotiate with a customer who asks for a discount. For example, you could offer to remove bonuses for the lower price.

And please know that just because marketer “X” sells a product similar to yours for a lower price is never a reason to discount your product.

Let’s not forget there are traffic generation programs that are free, that cost $17, and that cost $10,000. Which one do you think provides more value?

That’s right… the higher the price, the higher the perceived value. I’ve always thought it’s better to have 100 customers who buy a $1000 product than it is to have 10,000 customers who buy a $10 product. The $1000 customers have money to spend, have already spent some of it with you, and will be open to the next upsell you send. And in terms of customer service, it’s far easier to take care of 100 customers than 10,000 customers.

When you’re tempted to lower your price because Joe over there is selling something that looks like your product for peanuts, don’t do it. The last thing you want is a reputation for being a ‘Bargain Basement.’

Now then, let’s talk about a slightly different discount…
One that the customer must earn through loyalty.

How a Small Discount Retains Members Far Longer

Residual payments come in month after month, and they could be for software, coaching, memberships, and so forth.
Let’s say that you’re offering Coaching.
You might want to tell them upfront that as of month 3 (or 4 or 5) you will be giving them a discount on the monthly fee. The reason you give is that it helps with your scheduling and you’re rewarding the customer for that.

In our example, discounting your coaching starting with month 3 gives your student a great incentive to stick around because starting in month 3 they will pay less. Plus, coaching gets easier for you after a couple of months, too, because the client has gotten into the swing of things and you now understand what your client needs from you.

What if you offer a monthly subscription to your membership site? You might consider discounting member dues starting with month 3 or 4. Again, it gives them a good incentive to stick around. And the reason you can give for the discount is that it’s a reward for your best customers.

You might also place members in a coveted ‘inner circle’ once they reach this milestone, with added benefits. Yes, they are paying less and receiving more, but consider this: Most members drop off after 2 to 6 months. Imagine if you can keep them around for many months or even years at a discounted rate – it will be worth it.

How to Retain Members Longer

Remember: Give a reason for every discount you offer, and consider offering discounts to members who stay with you for a predetermined length of time.


Tags

Discounts, onlinebusiness


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