Everyone loves getting a bargain so offering a discount on your services can seem like a good way to reward existing customers and attract new ones. However, sometimes offering a discount can backfire and create a bad impression of your company. Here’s an example:
Last month it was time to renew my car insurance, and well before I received a renewal notice from my current insurer, a quote from another well-known insurance company arrived, both by letter and by email. Since I hadn’t asked for a quote and have never been a customer of this company, this seemed like an intrusion. The only contact I’ve ever had with this company was via a comparison website, when I sorted out my insurance last year, yet here they were sending me both junk mail and email. So the letter was torn up and the email deleted.
In the following weeks leading up to my renewal date, I received another email (the unsubscribe link was promptly used this time) and several more letters, one each week. As each letter arrived, I thought “not another one” and chucked them straight in a pile of junk mail waiting to be recycled.
When the time came to deal with the junk mail pile, I opened each of these letters and noticed that all the quotes were different – the insurer wanted my business so much that each week they sent a progressively cheaper quote! At this point I did (briefly) consider waiting for another week to see if another cheaper offer would come, but it was too close to my renewal date and I found a better deal elsewhere.
Despite that momentary interest, I was left with a really bad impression of this company, and I imagine I’m not alone; how many other people have they annoyed and alienated with a constant barrage of letters and emails?
So there are 3 ways that offering a discount in this way backfired:
- I never asked for a quote yet was bombarded with emails and letters – it was very spammy;
- by constantly reducing the price, even though I hadn’t asked for a discount, the company looked desperate for my business – that’s not very attractive;
- as the final quote was a lot cheaper than the first one, it makes me think that their insurance was overpriced in the first place.
As a result, the chances of me actually asking them for a quote in the future are very slim.
So what’s a better way to offer a discount? Here are a few ideas:
- Offer a time-limited or seasonal discount, such as for work done or orders placed in a particular week or month
- Launch a new service or product at a temporarily reduced price to encourage early sales
- Follow FreeAgent’s lead and offer a referral discount for both the new customer and the existing customer who referred them*
- If you’re friendly with your clients and know their birthdays, send them a card with a voucher offering a discount for your services, or if you don’t know their birthdays, try it at Christmas
One final thought:
Don’t offer so many discounts and special offers throughout the year that it looks like you constantly have a sale on!
Update, 1st May:
Today the same company texted me a new special offer. I never, ever agree to receive promotional texts so it’s definitely spam, and it’s now official, I am never using this company! They’ll probably start phoning me soon…
*If you’d like to sign up to FreeAgent, use this code and we’ll both get 10% off! http://fre.ag/41qk3gwm