One of the things I typically do as a retail consultant when I take on a new client is to discontinue discount marketing programs.
In fact, I often raise their prices to help them become profitable.
Before you read on, if you are one of the extreme couponers or use them religiously, this site, this blog and this post are not for you. Continue reading 7 Reasons Coupons Shouldn’t Be Used For Your Marketing »
Stories about haggling continue to abound with wild claims of amount saved and pervasiveness in America right now. Case in point was this article in the Los Angeles Times by Susan Carpenter, Go Ahead, Haggle. It quoted Pam Goodfellow with BIGresearch, a consumer intelligence firm that “Everybody’s looking for innovative ways to save a few dollars. If that means going to a garage sale and haggling a $10 item down to $5, it’s something people are doing right now.” She said a 2008 survey found that 50% of Americans were haggling for better prices on all kinds of products in light of the economy.
Cheap people have been around forever. You’ve had to deal with them before and so have I. When I used to sell western wear in the 80′s I’d have guys ask me to “throw in the shoe trees and I’ll take ‘em.” No dice. I remember asking one guy, “So how do you buy groceries – say, ‘I’ll take the grapes if you throw in the Windex?’” It usually got a laugh and a sale. Again, if you are a salesperson, you learn to read people and know how to be a chameleon with customers.
How did I develop thick skin to not discount? I saw the slippery slope I would be going down if haggling produced results. The gal or guy gets their way. They tell their friends of the “great deal.” Their friends come looking for that deal. You have to remember what you did to repeat it. Then the original person comes back and wants an even BIGGER deal for all the business they brought you.
The piece that I think so many businesses leave out is training their employees to not do it. I don’t care that Seth Godin has said all employees should be “empowered to discount up to 10% to save a sale.” That’s not good management.
Your employees are hurting themselves and faced with debt. They identify with anyone looking for a deal. They already feel you are making boat loads of money off them. They don’t know how to sell to begin with so if someone will like them for giving them a “deal,” they’ll do it. That can kill profits.
Here’s how to stop the haggling virus:
You must have scripts or well-meaning employees say things like, “I’m sorry I can’t do that,” which implies that someone else can. Or they say, “Only the manager can do that,” which implies the manager can.
As more stories continue to pop up by writers identifying with people looking for discounts you have to arm yourself to stop it, or face becoming one of those haggling helpless retailers grateful for any sale.
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I am so tired of the words “crisis”, “fear,” “downward spiral,” “worsening economic news,” etc., that I’ve become numb to whatever words follow. One word that gets used over and over again that really gets my goat, as if it were something fresh and newsworthy is the word “discount.”
Every dire prediction for holiday 2008 has to talk about retailers having to “discount.”
Extra! Discounts!
This is not news and hasn’t been news for a long time. Take a look below from the past five years:
From the Boston Globe, November 23, 2008, “Consumers will look for bargain-basement prices to help meet austere budgets, while retailers from Wal-Mart Stores Inc to Saks Inc learn if they have the right products at the right prices.
From the Chicago Tribune, October 29, 2007, “According to a new study by BDO Seidman, LLP, one of the nation’s leading accounting and consulting organizations, almost three-quarters (73%) of chief marketing officers at leading U.S. retailers believe discounting and promotions will be more plentiful this holiday season compared to 2006 due to the current credit crunch.
From CNN, December 11, 2007, “In some instances, consumers say they’re simply turned off by poor customer service or not enough discounting.
From Bloomberg, November 25, 2006, “Holiday discounts this year seem to be locked in a range between 20 to 60 percent.”
From the New York Times, November 28, 2005, “The disparity, analysts said, could indicate a tough season ahead for clothing retailers like Gap and Aéropostale and even deeper discounts for shoppers as the chains scramble to build momentum in the crucial approach to Christmas.
From The Associated Press December 2004, “Retailers are expected to increase discounting before Christmas after a late-buying binge failed to materialize during the weekend, fueling worries that industry profits could be hurt in the fourth quarter”
From CNNMoney, November 28, 2003, “ Despite signs of a pickup in the economy and an improving labor market, consumers don’t appear to be feeling the Yuletide cheer. The Conference Board in a survey Monday said U.S. households on average are expected to spend $455 on gifts this year, down 5 percent from 2002. “The 5 percent drop is shocking,” said Delos Smith, economist with the Conference Board, a New York-based business research group. “It indicates that perhaps the consumer tax rebate stimulus that benefited retailers during the back-to-school season has petered out.” Analysts say it’s the discounters such as Wal-Mart and Target that are expected to ring in the bulk of holiday sales, while department stores will offer the most aggressive promotions.”
Does all of this sound too familiar? It should – its an easy story to tell every year at this time of the year. That won’t stop any number of news sources from touting retailers “aggressive discounts needed to lure customers this holiday season” and how they aren’t working. Look for those stories this Thursday, Friday, Saturday, Sunday and Monday.
I’ll continue my thoughts on discounting in my next post about why people discount. Stay tuned!
