It’s no secret that people love a good deal such as discounts and other money-saving incentives. They are a great way to attract customers and increase sales. In fact, many retailers and businesses offer discounts as a way to encourage customers to make purchases.
Here, we’ll explore the pros and cons of landing discounts and other money-saving incentives.
Saving money
The most obvious advantage of discounts is that they allow you to save money. Whether you’re shopping for groceries, clothes, or electronics, getting a discount can help you stay within your budget and get more for your money. This is especially true for people on a tight budget or those trying to save money for a specific goal.
Chron’s Chris Miksen said discounts work as well for a business when the mode of payment is considered. Cash buyers may be offered a certain discount as opposed to debit/credit card users, the effect of which will be to help the business save some money in card processing fees.
Feeling rewarded
When you receive a discount, it can feel like you’ve been rewarded for your loyalty or for making a purchase. This can create a positive association with the brand or business, making you more likely to shop with them again in the future. Additionally, getting a discount can boost your mood and create a sense of accomplishment, especially if the discount was difficult to obtain.
Sense of exclusivity
Discounts can also create a sense of exclusivity. Some businesses offer exclusive discounts to members of their rewards programmes or to customers who sign up for their email list. This can make customers feel special and valued, which can lead to increased brand loyalty and customer retention.
Trying new things
Discounts can also encourage people to try new things. A restaurant might offer a discount on a new menu item to encourage customers to give it a try. This can lead to discovery of new favorite products or services that customers may not have tried otherwise.
Quality concerns
One of the downsides of discounts is that they can sometimes create a perception of lower quality. If a product or service is always discounted, customers may begin to wonder why it’s not selling at full price. This can create concerns about quality or value, and may lead some customers to avoid discounted products altogether. Even worse, Namogoo took note of data from RetailMeNot indicating that 48 percent of respondents avoided brands that do not offer discounts while around 70 percent of millennial buyers want to see any discount offers first before they buy anything.
Perception of price gouging
On the other hand, if a product or service is rarely discounted, customers may perceive the regular price as too high. This can create a perception of price gouging, which can turn customers off from the business altogether. In some cases, customers may even feel like they’re being tricked into paying more than they should have.
Over-reliance on discounts
Some businesses may become over-reliant on discounts as a way to attract customers. This can create a cycle where customers only shop when discounts are available, which can lead to decreased profits and sustainability issues for the business. Additionally, over-reliance on discounts can make it difficult to establish a regular customer base, as customers may not see a reason to shop with the business outside of discount periods.
Loss of revenue
Offering discounts can also lead to loss of revenue for the business. This is especially true if discounts are offered too frequently or for too long a period of time. While discounts can attract customers, they can also lead to decreased profits and financial strain for the business.
Companies like CIGNO have grasped the potential of discounts and factored it in as well in their Membership programme. The programme involves paid memberships into one of three special tiers. The basic tier may share members with up to ten discount offers but the higher tiers will have an unlimited number of deals listed. The only question is, which ones can you handle?
It’s important for businesses to carefully consider the impact of discounts on their bottom line and their customer perception before implementing them as a sales strategy. Similarly, customers should also carefully consider the value and quality of discounted products and services before making a purchase.