This post talks about the pros and cons of offering a discount to your customers, and includes examples of where this may have resulted in loss of value in a brand.
In some instances, yes, offering a discount on your product or service can devalue your brand and product. Some businesses have no choice as they need customers through the door, and others would rather have the sales at a discounted rate than have them not at all.
Take a look at Pizza Express. Many people I know would not visit a Pizza Express without having a discount voucher or code (myself included). Don’t get me wrong, the Calabrese pizza is awesome, as are many of their dishes, however when you’ve paid £10 for a starter, main course and a drink, the product becomes worth only that much – you’d feel robbed paying the full price of almost £20 for that same food. That to me is where Pizza Express have, to an extent, devalued their offering. At the end of the day, it gets bums on seats and clearly why Pizza Express offer such a deal.
That doesn’t mean offering a discount will always devalue your product or service. I recently visited a local travel agent to purchase some Euros for a friend who was going on holiday. The exchange rate was 1.232. I asked the member of staff on the exchange desk if there was any better they could do, they gave me a straight no. I proceeded next door to another travel agent and asked the same question, they said the same rate. I asked the same question, she hesitated, then offered a rate of 1.2325. I said yes.
The point to note here is that by offering the very tiniest of discount, I went ahead and made the purchase. I, the customer, felt like I’d won. I was exchanging £500 worth of Euros. My maths make the extra she had given me at around 25 cents (20 pence worth of Euros). It’s basically nothing. But that willingness to offer more than their competitors meant I went with them, and I am therefore much more inclined to go back the next time I need currency. It didn’t devalue the offering as such, it just made me feel like I’d got a bargain.
How do you feel about offering discounts? Do you think it devalues your brand, or would you rather offer savings to have business coming your way?