September 11, 2010
September 11, 2010
[This is an excerpt from my new book, Groupon: Why Deep Discounts are Bad for Business]
Do you want to be known as a place that gave customers a “deal” or the place that had the perfect gift for their son’s first trip to camp?
I maintain you can’t support both. Why?
Because the training that is involved in having any staff member be able to whittle down your SKUs to a manageable two or three costs money. The good ones can move it out the door by selling it, not clerking it and earn customers' loyalty.
They oddly don’t do it for free...
When you discount, you throw all of that expertise out the door.
What about Priceline and others…
Are these sites like Groupon any different then Priceline or hotels.com where hotels discount their rooms?
I work with frequent travelers all the time. They’ve stopped using the big hotel brand’s own site and use Priceline or hotels.com because they can get a room for $99 just about anywhere they travel. Or less...
In many ways these brands have ceded control over their unique selling proposition and given us the distinct impression their real room price is $99 or less. Priceline or hotels.com is the brand, not Westin, Sheraton or Marriott.
Looking for the magic bullet to "put heads in beds," the current Chief Marketing Officer of those hotel brands decided offering rooms at a big discount would juice occupancy.
But at what cost?
Discounting diminishes the very brand they are working to build. How the discount builds the brand for the future is not addressed. It is short term gain for long term damage.
Is that a smart way to build a brand? I don’t think so.
Unless of course, you’re Warren Buffet, the billionaire behind hotels.com.
You build a brand with lots of exceptional experiences. Lay off the impulse to discount your wares, especially to pay others like Groupon that help you post losses.
Tomorrow: Pt. 11: Wrap-up of the Groupon Discounting Series: The Final Frontier
Bob Phibbs, the Retail Doctor®, has helped hundreds of small and medium-sized businesses in every major industry, including hospitality, manufacturing, service, restaurant and retail. He is a nationally recognized expert on retail business strategy, customer service, sales, and marketing. With over thirty years experience beginning in the trenches of retail and extending to senior management positions, he has been a corporate officer, franchisor and entrepreneur.
Learn how to improve your business with The Retail Doctor's Guide to Growing Your Business.
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