Every company offers an incentive from time to time to drive short term revenue. But marketing firms are increasingly using discounts to show their clients results and it is a lazy way to market. Gone are the days of using smart value propositions and segmentation to drive real, sustainable results and enter the days of giveaways and lower margins. We recently watched a former client’s new marketing firm offer 3 steep discounts in a row.
“Take $200 off any of our models by this date”.
“Save $300 for our 30th anniversary”.
“Save $444 for the 4th of July”.
See the trend? They are training prospective customers to wait for the next, better deal. Sure, they might have sold a few units but if they did, they did so at a hell of a lot lower margin and they taxed their business to produce products they made less money on. Add in the cost of marketing these “great savings” and you have lower margins yet. And what happens on the 5th of July? Orders drop off as customers are waiting for the 9th where, hopefully, all models will be $900 off!
It’s a lazy way to show volume results that lack margins and are terminally unsustainable. It’s as common a tactic as you will see in today’s marketing paradigm, but it lacks the long-term vision to drive higher margin conversions that can be duplicated and grown. Frankly, it’s a silly way to do business- unless you have a horrible product. I guess if you sell a bad service or product, it’s a great way to go.
Imagine being a sales rep at a company like this. One day you can sell your butt off because you’re giving it away and the next you must fight tooth and nail to explain to customers why they can no longer have that discount. Again, these sales are designed to be good for the marketing firm; not the client.
At Actionable Insights, we will never advocate for hurting the bottom line of a business just so we can look successful. Instead, we advocate strategies that may take a little longer to develop but will ultimately deliver the margins our clients need, with an increase in volume that we are able to reproduce every single month. It’s a strategy that puts the client and their business model first. What we’ve learned is that when we do that, everyone wins.