Home Business Magazine October 2012 : Page 42

BUSINESSES & OPPOR TUNITIES The Cost-Cutter’s Guide to Growth Continued from page 40 3. Tap into associations such as www.APQC.org and www.ISBM. org for great benchmarking and shared learning. Tip #5: Bring your training in-house. How many announcements do you get per week for conferences in San Diego 4 Ways Discounting Is Slowly Killing Business Growth Few strategies can drive sales faster than discounting. Conversely, “few strategies can destroy a business’s long-term health faster than discounting,” says Jason Marrs, pricing strategist and co-author of No B.S. Price Strategy with Dan S. Kennedy. “Unfortunately, the majority of businesses use discounts because of the positive effects without understanding the negative,” explains Marrs. “They don’t understand that dis-counting undermines their price integrity, customer loyalty, satisfaction, and even perceived quality.” Marrs offers the following points for business owners to consider: Price Integrity Price integrity refers to the believability of a given price. Marrs clarifi es that the more a business discounts some-thing, the less believable the price becomes. Believability is a critical component for the sales process. If customers believe the price will be lowered in the future they have little motivation to buy now, so they wait for the next sale; thus, becoming a price buyer. “Price buyers are the least loyal to businesses and brands. They are loyal to price,” notes Marrs. “That means whoever has the lowest price will win them.” Perception of Quality Studies show that discounts actually reduce the perception of quality. Some studies have even shown literal reductions in performance. As the perception of quality declines, so does satisfaction. Distrust Discounts can cause customers to feel taken advantage of. This happens when they compare the price they’ve tradi-tionally paid to the discount and wonder why they ever had to pay the full price. Underestimated Value Something to keep in mind is that price is not the reason most people buy. They buy to receive a set of benefi ts that are of value to them. Understanding what those benefi ts are and how customers value them is how business own-ers can create compelling propositions that are based on value as opposed to price. Jason Marrs is a pricing strategist who coaches entrepreneurs and professionals in overcoming price reluctance and resistance. He is the CEO of Strategic Pricing Center Inc., creator of the Simple Strategic Pricing System for Entrepreneurs, and co-author of the book No B.S. Price Strategy with Dan Kennedy, available from Entrepreneur Press. 42 Home Business ® | September/October 2012 www. homebusinessmag.com

Medic One Academy
Using a screen reader? Click Here