Here at ActionCOACH, we’re all about driving profits! When business is slow, many businesses may resort to discounting in order to keep traffic flowing. While in the short term, this tactic may bring some success, in the long term it can also bring numerous risks and pitfalls.
The first of which is that it may damage your reputation in the marketplace, especially if you are positioned as a middle-to-high end course.
In addition to this, it may also lead to consumers continually wanting ever more discounts and incentives, and in some cases, they may even wait for discounts before buying or acting.
Using premiums
Rather than doing this, a much better approach to use, before resorting to discounts, is to use premiums. In doing so, you are able to maintain your regular pricing integrity, and offer extra value only if the customer acts in the prescribed time frame.
An example of this is a course owner in Southern Florida who battled the seasonal heat and the rampant discounting of most other golf courses, by giving away free golf balls. Instead of dropping their rates from £40 to £25 like all the other courses in the area, this course kept its rates at £39. In doing so, during this promotional period, players got a box of 18 balls free every time they played. Since the boxes were brand name balls, the market, or in this case, the perceived value, was about £25. However, the owner was able to buy them in quantity for about £7 a box which kept his net profit at £32, or £7 a round above his competition and gave his guests a wonderful bonus.
The following month he planned a similar promotion, with a top-of-the-line golf glove. To take advantage of the offer, the players have to fill in a three-question survey about the balls and gloves they use. The owner doesn’t really care about the answers to the questionnaire, instead, he wants their snail mail and e-mail addresses so that he can follow up and alert them to similar promotions they might be interested in, which will, in turn, reduce his future marketing costs.
While people know discounts can be offered and extended at any time, they also realize that premiums can and do run out! This is ideal for businesses as their consumers will have to act quickly to make sure they don’t miss out.
Premiums at different levels
Premiums can also work at higher levels. Staying on the golf theme, recently a business owner conducted a campaign to “blast” an e-mail offer to 6,000 subscribers of another owner’s newsletter. This resulted in four £2,000 ticket bundles being sold, each including over £500 worth of high perceived value, such as a free club fitting, a free video lesson, a golf hat, etc.
This example is proof that the higher the perceived value of the premiums, the easier it is for consumers to say yes to your offer.
Premiums can work for selling anything
Premiums may also be used to drive your golf instruction business by including free golf books or instructional videos as part of your 20-lesson package. We recommend trying many different offers and combinations of offers to see which premiums perform best for your business. It’s only by such testing and measuring that you can really get a feel for what works and what doesn’t.
Ask your suppliers if they are overstocked in particular products that they’d like to get rid of at a steep discount, and then use these items as premiums for your business. It makes a lot more sense than simply discounting and it will give your product(s) a higher perceived value!
If you need more assistance in managing your business, contact ActionCOACH today.
