Offering sales discounts is a tempting tactic. In the short term, it drives traffic and sales. What you lose in margin is made up in volume. Problem solved, right?!
No, bigger problem created. What you're really doing is eroding your long-term margins and your long-term sales. Especially if you run a business based on quality, service and a brand with some equity. The discount is sucking the life-blood out of your brand.
Think in terms of adding value to your product instead of "de-valuing" it. An offer of a gift with purchase or complimentary service will do more in the long run than a temporary discount offer.
I can hear the skeptics saying that a gift will not drive traffic. Consider a study done by SMU:
A few years ago, advertising faculty at Southern Methodist University executed research for PPAI involving business and residential customers of a food-delivery service. The objective was to see which promotion method stimulated the most repeat business. Surely you will not be surprised to learn that the group receiving the $2-value coffee mug/pencil caddy reordered 18 percent sooner than the group motivated by a $2 coupon and 13 percent sooner than the control group receiving no motivation. And in terms of average number of orders, the group receiving the promotional product significantly outperformed the other two groups.
Be wary of the dashing and mysterious temptation to discount your brand. It may be love at first bite but the result is a brand that pales and can't stand the daylight.
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