12
Sep
2014

Recently on Linkedin I found this question asked of a group of auto repair shop owners:

"What's your opinion on discounting?"

Here is my response.  As a consumer ask yourself this... If I could get product A for $2 from provider A, or the same product A from provider B for $1 wouldn't I choose provider B to save the $1? The obvious answer is yes. Digging a little deeper now, as a consumer this is only an obvious choice if we view product A that is being offered by both providers as identical.

Let's continue... Personally, I don't 100% rule out discounts, but if you did want to avoid discounts at all cost the inescapable conclusion is that you will have to convince your consumers that your product A is not in fact product A being offered by provider B, but that your product A is actually product X. This requires product differentiation which most of refer to as value added services. Now we have turned this into an apples vs. oranges scenario where your consumer might be willing to choose your product A for a slightly higher (non-discounted) price because it is perceived as a better version, product X. Which leads me back to why I don't 100% rule out discounts. Here is why...

What if the cost and time of communicating to your customers and providing the fulfillment of those value added services that make your product A morph into product X is in fact more costly than just simply providing the discount to begin with? I enjoy hearing your responses...

Here is an example response: 

Russell Logan on Linkedin said, "Actually some of the best performing shops we see embrace discount BUT it's tightly coupled with a loyalty program that drives repeat business."

Ahh, I love it!

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