THE SALES VORTEX
Blowout sales. Half off sales. Red ticket sales. Discount days. Buy 1 get 1.
We’ve overstocked or surprise the boss is gone away and we’re going crazzzzy!
If you walk through a mall, drive by a car lot or turn on the radio, you’re bound to find a business with a sale.
For some industries sales are just part of their business model. A way to move end of season product or part of their positioning strategy. For some, the numbers to allow for sales are built right into their budgets.
For others, sales are a last minute way to get people through the door, a panic button they hit when times are slow. While we understand first hand the need to move product and keep customers coming through the door, we can’t help but ask, at what cost?
Offering discounts to drive business is not always a bad idea. Depending on your brand and market position, it can either be really good or generate less than desirable results.
For example, a new spa.
Their décor, treatments, qualified staff and pricing positions them as exclusive in the marketplace. Upon opening they market special offers to drive business and get the word out. Soon they have a small but loyal following, people willing to pay full price for the services because they value what this spa has to offer.
Overtime the spa recognizes the need to expand their following. To do this, they offer a 50% off sale. The good news? They sell a ton of services. The bad news? Most of the people who come are not the spa’s ideal target audience; they are motivated solely by the deep discount. The result? A pissed off loyal customer base who can’t get appointment times and see a change in the overall tone and atmosphere they’ve come to expect.
The really bad news? This new customer base isn’t loyal. Most would never pay full price for the services. Or best case, a small percentage return. But at what cost?
When the flurry of activity subsides, what should the spa do? Reach out to the loyal client base and invite them back? Offer more discounts to create another buzz of activity? This is how a sales vortex can easily be created.
What if the spa offered an incentive to their loyal client base to come more often? A discount on a service they haven’t tried but you think they would like. Or launched a loyalty program.
What if the spa hosted an event for their loyal customers and invited them to bring a guest. Spoil them and showcase all they have to offer.
I don’t know how this story ends. Perhaps the spa learned its lesson, the loyal customer base got over it and came back and everything worked out great. Or perhaps the loyal client base went elsewhere, while the sale was happening and instead found another spa to be loyal to.
Maybe this spa had to continue offering huge sales to keep the new customer base happy, the ones who only shop when there’s a deal. Continuing the sales vortex.
So what’s the lesson to be learned?
Know your brand and the value of your current customers. Instead of turning to sales as a quick fix, consider other options and most importantly the value of your current client base. Often times fostering those relationships can be much more cost effective, and sustainable than searching for new ones.