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Re:Do you think offering discounts is a good idea? - 2006/02/16 22:39
Marketing incentives and discounts have been proven to drive sales. I think they are a great idea as long as they are used with a goal in mind.
Benefits of Discounts:
1. The "pre-promotion": Having money ahead of time "in the pocket" is most times well worth the incentive. The reverse is to “hope” they will buy from you in the future. But, the longer they hold on to the money, the more change that they will find something else to do with it. That is why airline tickets charge higher prices the closer you get to the actual date of departure. They are giving incentives to people that plan and buy ahead. They also know the breakage (or product purchased vs. product used) is high. Meaning, lot’s of people buy early and never use. That’s just money right in your pocket. That’s why Gift Cards are such a huge industry. A majority of the cards are never redeemed for product. Pure profit.
2. People buy packaging: Look at McDonalds. They never would have sold so many fries if they had not been "packaged" in the meal. They may loose a bit on the actual base product cost, but they more than make up for it in the volume sold. So, if you package something, you have a much greater chance of actually converting a prospect to a customer. They want, simple, easy, and one-to-one services that speak directly to them.
3. Up-selling Clients: The "add-on" sale. If someone has already purchased from you, they are open to additional products or services you may offer. Because you do not have to spend any resources (time, money, people, etc) to get their business (marketing programs, advertising, etc) your actual cost of sales is much lower. Meaning, although you may be "dropping" your hourly rate as the time goes up, you are doing much less to get the extra money. That means the more hours in the bottom scenario that started this discussion, the less it costs you to actually get them. So, you make more money, the customer is happier, and the world is once again right (or something like that).
With Regards,
Samantha
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DO IT YOURSELF TOOLS 
