Can you recall the excitement and joy you experienced when you did a discount/special offer, and received a subsequent tsunami of sales?
It’s a great feeling getting a surge of sales, but as we soon find out, it can get addictive.
It increases revenue, so this addiction can’t be a bad thing, right?
The reason is simple: the customer gets used to your discounts, and then will not purchase when prices are normal and will instead just wait for the next sale.
Therefore, if you run consecutive sales, over and over again; the week you don’t run a sale is a week your sales will crash. Therefore, you must keep offering discounts to keep sales up, which reduces your profit margins, a never-ending cycle.
This happens to all businesses, selling products or services.
So well-known is this phenomena that father of Advertising David Ogilvy had a name for it: Discount Addiction.
This doesn’t mean you can NEVER have a discount or a sale ever again, but it does mean you should make them very scarce.
Have you ever seen Apple putting its products on sale? No. That’s because it wants to maintain a concept of ‘high value’ in the mind of consumers. Things that are on sale lose their value in the mind of the customer. So, when tempted to put things ‘on sale’ for a quick buck, think of the future pain and not the present pleasure, and just SAY NO.