NEWS FLASH: “Amazing discovery: expert reveals discounting doesn’t work any more; value-adding the way forward for retailers in the recession.”

by Greg Milner on 23/02/09 at 9:48 pm

Gosh. Really? I had to laugh when I saw the story on television this week.

For years I’ve been beating our Members around the ears about how discounting is ‘evil’, and showing them how to boost the value of their products and services with low-cost or no-cost add-ons that give the customer a perception of increased value.

Seems the more pain businesses suffer, the more willing they are to accept radical surgery.

According to a retail ‘expert’ interviewed on this program, “The next (?) big thing is value-adding and product grouping. The premise is that you’ve already got the best price you can, but what else can be thrown in…”

And, in a stunning example of revolutionary thinking, this guy declares “Things are going to change in the next few weeks and months, I actually think some consumers are almost getting bored of the sale…it used to be an event, now it’s become the normal practice and I think people are starting to say ‘where to next, what do we do next’”.

Oh, bravo.

So overnight, retailers have ‘discovered’ the bleeding obvious; that is makes more sense to give away a $500 Blue-ray player (that actually only costs the business $200) with every plasma screen @ $2,000 than it is to discount the plasma screen by $300.

Here’s the other side of it: the customer feels better because he’s getting $2,500 of value for $2,000. Because he knows the Blue-ray player would normally sell for $500. But a $300 discount only gets him a saving of…er, $300.

Amazing. Using a pencil and mental arithmetic, a third-grader could have worked that out for them.

I’ll be your third-grader.

Give away a Blue-ray player and it costs you $200 to make the sale.

Discount to $1,700 and it costs you $300 to make the sale. Obvious? I hope so.

Now, go figure for yourself how you can apply that strategy to your business. And don’t tell me ‘oh, but my business is different…”

Of course, our Inner Circle members have been profiting from this strategy for years… and they haven’t had to write the material that sells it, it’s all in the Essential Salon Owner’s Marketing Toolkit™.

Rating 3.00 out of 5

A post by Greg Milner

The odd idea, a bit of prodding, a nudge here and there, a little fun, and the occasional dose of brutal reality. Greg is co-founder and CEO of Worldwide Salon Marketing, a writer, direct response marketing consultant, specialist marketing systems adviser and coach. He (sometimes) accepts private consulting clients.