One Thing: Day 214: My Timezone Points
Day 214: My Timezone Points
Yesterday I was explaining how to strategically discount.
That means start with trying not to have to do it… but if need be, do it with strategy in mind.
Like a big nose zit in high school… try to avoid them but if you’re gonna get one make it short term and try to make it look OK.
Speaking of high school, here are three things I never really had closure on:
- My high school girlfriend
- Was Joey from The New Kids on the Block ever really cool?
- My Timezone points
I got a ton of responses and comments yesterday on best practices of discounting so I figured I’d go deeper for you.
Subsequently your ONE COACHING THING today is more on discounting:
‘Determine What You Can Afford’
For a frame of reference to offer a 10% discount the average business needs to increase sales by 33% to break even.
That’s kinda mind-numbing and a very good reason not to do it….
Read it again so you GET IT.
But each business is different and maybe their (your high-end coaching client) business really is, different?
Therefore, run the numbers with the goal of determining what kind of sales volume increase you’d need to account for your clients 10%, 15%, or a 20% discount.
Ask yourself if that target is realistic given the way their customers typically respond to special offers.
If you’re aiming for a 10% increase in sales, but sales volume has to increase by 33% to get there, there are better strategies to help them deploy.
But, if they’re trying to get rid of old merchandise, and a 30% reduction in price only requires a 10% increase in volume to cover costs… that’s more palatable.
Or when they want to boost the average dollar sale (supersize that), make sure that the amount they require customers to spend is high enough to account for the discount and still include an increase in revenue.
It can be helpful to establish a minimum profit margin, or an average daily profit margin, so you can be assured to cover their overheads and have a clear measuring stick while you evaluate the merits of different discount strategies.
Remember that they always have options.
- Consider whether they need to offer the discount to their entire market, or if they can segment it and limit the offer to those who need it. For example, an offer to existing clients or members of your customer loyalty program could serve your objectives without going to the public.
- Do you have to offer a discount to stay competitive, or can you create new product lines that will have a longer-term impact on the competition and increase market share?
- Can the market afford what they’re selling right now or is it a seasonal offering – regardless of the discount? You need to time the offer correctly.
Example: January is generally a rough financial month for most consumers, so your discounts will be focused on moving old stock, not increasing sales volume.
Example 2: North Americans are away in July/August so might that timing might not be suitable.
Example 3: Discounting winter clothing/snow skis at the beginning of winter is a dumb idea and a great way to make less money.
Discounting winter clothing/snow skis in the summer is a good idea and a great way to sell deadstock and make room for next year’s inventory.
Ask Them The Following Questions When Making Your Decision:
- How deep does the discount need to be to have the desired effect?
- How much can they afford to discount?
- Do they need to discount all products equally?
- Can they use coupons to “code” the offer?
- Is the discount conditional?
- How can they structure the discount to achieve the desired perception?
As a general rule, try to get away with the lowest possible discount. Often, 10% is enough to motivate customers to buy now vs. later, or now vs. now at all.
If you’re looking to move product quickly, use the biggest discount they can afford.
In this case, you’re just trying to recoup your costs, so a deeper discount will encourage faster sales and move more dead inventory.
Lastly, make sure you give the discount a time limit to create urgency and manage perception.
Discounts should be a limited time offer, not a standard practice.
Remember… to offer a 10% discount the average business needs to increase sales by 33% to break even.
Be strategic when discounting.
You heard it here first.
Obsessed with your business coaching success,
Karl Bryan aka King Karl
PS. “An idiot with a plan will beat a genius with a plan.” ~ Warren Buffett
PPS. If you’re looking for a proven system to follow for your coaching…. I created business coaching software and high-end step by step training to support it…
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Karl Bryan gets clients for Business Coaches...period. He is the Founder and Editor-in-Chief of The Six-Figure Coach Magazine and Chairman of Leader Publishing Worldwide, home of the largest private community of Business Coaches (24 countries and counting) in the world.
His goal is straight forward… to help serious coaches/consultants get more clients.