You’re coming into the end of the year.
You’re short on where you want to be and you sense you need to do something drastic to make the number.
One way to make it is by offering a few customers a discount to get them to either buy for the first time, buy more, or move a purchase up from next year. These all sound like options you should explore. Before you do anything, though, let me share some thoughts.
Offering a discount to bump your year-end sales can create as many problems as it solves.
Customers who sense a discount might be coming are naturally going to put off buying until they feel they have received the best discount possible. Challenge to this is the well is polluted. This is a major problem if you or your company have used discounts in past years to help close out a year. This is why I advocate that you NOT do it, as tempting as it might be.
Once you start discounting at year-end, it will become a habit that is incredibly difficult to break.
Using a discount as a way to accelerate a purchase only serves to move volume, but does so at a steep cost. Cost is, of course, lost profit. More important, the volume that gets pulled out of the next year needs to be replaced. This means you wind up starting the year in a deficit with regard to volume.
Unless you’re confident you can make up the volume you’ve moved forward, the only thing you’ve done is create another problem that you will need to deal with.
First, if you must offer a discount to make the year-end number, offer the discount to a customer or group of customers in a separate channel from where you normally operate. Only do this if you are 100% sure the discount will generate volume you would not have had this year.
Second, only do this if you are 100% certain the customers who are being offered the discounted price have zero potential to come back and buy more.
Third, the channel in which you wind up discounting the volume must be one where the volume will be consumed and there is zero risk of it floating back to your regular channel.
This strategy of using a different channel to discount volume is one I recommend cautiously and should only be done as an absolute last resort.
Suffice to say, you can’t take year-end price discounts lightly! They bring with them challenges you possibly haven’t considered.
Copyright 2013, Mark Hunter “The Sales Hunter.” Sales Motivation Blog.
Great advice as usual Mark!
Hey Mark! You’ve raised some pretty good points on why year end price discounts may not be a good idea after all. Personally, I’m a big advocate of companies working on their after sales support services instead of doing major price cuts.