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Discounts, Offers, Manipulations

Dec 7, 2012

discounts, offers, manipulationsMany companies use discounts and offers to get us interested, or to increase exposure initially.  Promotions and the like can be a very effective tool, but they can also be a dangerous way to get new business, as we’ll see.  I mentioned a few weeks ago Simon Sinek’s excellent book “Start With Why”.  His basic premise is that in order to connect with the right kind of clients, you need to understand why you’re in business at all, and make sure your prospective customers understand it, too.  And in support of this, he explains why relying on what he calls “manipulations” (dropping prices, running promotions, using fear or aspirational messages, promising innovation) isn’t enough.

The reason so many businesses rely on manipulations is because they work. Sinek doesn’t deny this, and neither would I.  Recently I was at a chemist’s and they gave me a voucher for a free Graze Box – nutritional snacks delivered to your home or workplace.  I gave it a try, and I love them.  I’m not sure how long I’ll keep getting them, but it was fun to try and so far I’m quite happy with the deliveries and quality.  I often get emails from various companies I’ve connected with in some way, and if I was thinking of buying from them, their discount offer might just tip the scales and cause me to buy.  They work, yes.  But at what cost?  “What price are you willing to pay for the money you make?” Sinek asks.  “I cannot dispute that manipulations work,” he says, but “not a single one of them breeds loyalty. Over the course of time, they cost more and more. The gains are only short-term. And they increase the level of stress for both the buyer and the seller.”

With that in mind, let’s have a look at the various manipulations and evaluate what you get and what it costs.

Lowering your prices – this can range anywhere from simply reducing your normal prices, or offering a one-time discount.  I use an online printing company called Goodprint for some of my printing because a friend recommended them.  But when she told me about them, she added, “And if you sign up to their email list, they’ll send big discount offers every few weeks – so don’t pay full price at first.”  So I signed up, waited, and sure enough two weeks later there was an email offering me 50% off my entire order.  The interesting thing with Goodprint is, they’ve figured out their market.  If you begin buying business cards and stationery from them, you become dependent on them because they make the ordering process easy – and from time to time you’ll order even if there’s no discount. They also change their discounts regularly – one month it’s 30% off business cards only, the next month it’s free shipping, the next month it’s 60% off everything and you’re wishing you hadn’t fallen for last month’s offer.  They build loyalty based on their excellent products and quick service, but they use price discounting to do it.

Promotions – something extra that you get for what you were thinking of buying anyway.  For example, if you were thinking of getting the new iphone, and suddenly O2 sends you an email offering you the phone plus a new case, you might just go for it.  Or a discount on your broadband, or a slightly lower monthly contract price.  You can see why it “works”, but also does very little to build loyalty.  The company has to do that on its own.  If I was going to buy the phone anyway, it might not matter to me who I get it from, or what network I use.  These days it’s quite simple to transfer your number to another network.  So, they’ve got your money, once, but do they have you for life?  Will you stick with O2 even if someone else offers you something better?  This is a major consideration you want to give when you’re offering promotions.

Fear – We’ve all seen commercials that try to scare us into taking action.  From vitamins to life insurance to computer backups, we’re told that if we don’t buy from them, there will be hell to pay (or at least something very near it).  Again, this can work to a point: but it’s not a loyalty-generator.  You don’t initially love someone who scares you to death, even if they’re right.  They’re trying to point out the great value that you will experience, and going with the negative side instead of the positive.  If you use a tactic like that, again be aware that you’re not initially building loyalty, and you’ve got some work ahead of you to make a connection with your customers.  Some companies try the other route, and try to show you the happiness and freedom you’ll have if you go with them, but they’re still promising that you will be saved from great danger or pain or difficulty.

Inspirational Messages – I’d almost call these “politician’s promises”.  This kind of thing offers you the moon at a very, very low cost.  “Six weeks to these abs!”  “Lose 40 pounds by Christmas!”  “Double your profits in seven weeks!”  Most of us dismiss these out of hand – but we see them so often, it’s obvious they “work” for some people.  Sinek points out that they do – they’re “most effective with those who lack discipline or have a nagging fear or insecurity that they don’t have the ability to achieve their dreams on their own (which at various times for various reasons, is everyone).”  This is probably the manipulation I hate the most, because it feels like a blatant lie.  Most people who buy the acai berry smoothie shake will not lose 40 pounds by Christmas.  Or they’ll buy the ab-cruncher and only use it for a day or two.  And the retailers count on this. They know fine well that most of their  new customers are simply grasping at straws, and they’re just taking candy from a baby, as the saying goes.  It’s just mean.  Honesty is always the best policy – and if it turns away those who aren’t willing to work a little, then it turns away those who would be really difficult customers anyway!  I’d rather have someone tell me that it will take 8 months to lose the 40 pounds, but it’s very, very likely it will happen; rather than promising me it will take six weeks only for me to discover I was taken in.  Again, a great cost to loyalty.  We don’t admire companies who hold back the truth, or send it packing entirely.

Peer Pressure – This is the tactic of pointing out that “everyone is doing it”.  A celebrity holds up a Gillette razor and we’re meant to make the assumption that every strong and handsome man will use this, so if you want to be that person, you’d better buy that razor.  Or a sales rep for a particular industry says that 70% of companies in your industry use this product.  This is another manipulation that I don’t like, because it leans heavily on pressure that may not be right for you.  Sinek points out that 70% of your competitors may be using this particular product, but “what if 70 percent of your competitors are idiots?”  I find this especially true in the accounting industry – and I work extensively with accountants, so I know the truth of it.  Accountants have a major blind side when it comes to innovation.  Almost without fail, when something new and exciting appears on the marketing front, an accountant’s first question is, “What other accountants are using it? What success have they had?”  I can see the value in testing something new against your industry. What works for most businesses doesn’t work for all.  Just because photographers are using it doesn’t mean graphic designers should.  But in the accounting industry this kind of thinking begins to happen so much that almost nothing new and innovative is picked up for at least five years…and by then technology has moved on again.  Websites, social media, blogging, videos, email marketing….the companies that have been using online marketing for years are experiencing success at unprecedented levels.  But many accountancy firms still have bog-standard websites that are at best an online brochure, and at worst will actually turn people away.  Many accountancy firms I speak to don’t even have a consistent database.  And all this when we’re at the point that there are CRM systems that can automate your marketing and sales process to the point that you begin to get emails dropping into your inbox saying, “This sounds great – when can we start?”  (I can personally vouch for it.)  But most accountants are not using these systems.  They’re spending £100 a month here or £50 a month there or £600 a year there, and wondering why their marketing doesn’t move forward very quickly.  Please bear with the rant – if you’re an accountant who receives and reads these marketing tips weekly, you’re probably a step ahead of the rest.  But if you haven’t taken further steps, it could be because you’re listening to the companies who are using peer pressure effectively – but only effectively for them. What about you?

Novelty (innovation) – This is the declaration that what has been developed is new, different, amazing, like nothing else on earth.  Sometimes, every rare once in a while, that is true.  When Apple came out with the very first iPhone, there was nothing like it on the planet.  By the time they got to the iPhone 5, there were a lot of similarities in other phones, because the competition had gathered the wagons and begun copying everything Apple was doing.  But success for Apple is not about features.  I discovered this when the iPhone 5 came out, and Samsung started running all these adverts about how their phone did pretty much the same thing, and had a bigger screen, and had a cool stylus pen, and Apple wasn’t that revolutionary after all.  The problem is, I don’t care if Samsung’s product is about the same.  I like Apple.  I’m a Mac person, through and through.  I have an iPhone 5, a Macbook Air, an iMac, and I’m just about to buy the new iPad simply because it’s Apple.  (I have no rational reason for needing it.)  I love the company.  I love their laid-back attitude and their hard-work ethic of delivering good quality products.  I love the way they never offer discounts, and the price is the price.  I love how you can go in to an Apple store and just plug in your iPhone and read a book while you’re waiting for it to charge, and no one kicks you out because you’re not buying anything.  As Sinek would say, I’ve connected to the “why” – who they are as a company connects to who I am as a person, and they’ve got my loyalty to the point that it doesn’t matter what Samsung creates.  I imagine that all the people who rushed out to buy the new Samsung Galaxy will, in 12 months’ time, be looking longingly at something else which has suddenly cropped up.  Samsung is raving about innovation, when really their features are the same as everyone else’s.  Sinek says, “Real innovation changes the course of industries or even society.” If you’re going to go with the ‘innovation’ technique, you better be sure you’ve got it – otherwise you’re just promoting features, and manipulating people to come to you for a short time.

So the long and short of it is, manipulations work…in the short term.  They get you more business for a little while. It may be a good strategy for a short period – but be aware that when you get the new business, it’s entirely up to you, your products and services, your team, and your company to build loyalty.  Think about how you are going to do that when your manipulations wither away, or when someone else comes up with a better one.