Reader Question: Can You Discount For a Reward?
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Today, I received a reader question about a pricing piece I wrote a few weeks ago.
Find the original post here:
The question: “I’m curious what you think about discounts in pricing as a reward for being a loyal customer.”
I know that you often have a similar so I wanted to share my thoughts with you.
Here’s my reply:
“I'd probably approach this from one of two ways depending on the situation:
You could have a special member's price for merchandise across the board that reflects that 10% price and don't call it a discount. Just say that you've been buying tickets for 5 years and we are offering you a member's only price.
After 5 years, you could just send folks a free t-shirt as a thank you and have a special design on it. That happens at my son's summer camp.
With parking, you could actually put people in a special parking area and charge them the same price or, again, offer a special parking rate.
The thing about the value is that you'd have to know from the customer's POV what they'd find valuable.
My guess is that they'd actually appreciate a gift or some sort of elevated experiential thing more than the discount.
It is the act of discounting that harms the brand.
The special price or the special value add doesn't typically hurt the brand. So it is a messaging thing.”
Additional Context:
To go a bit further on this…
It isn’t the reduction in price or the change in pricing that is problematic. It is the framing of the price around the discount that harms you.
A discount conveys a sense that you question the value of your offer.
You may not need to reduce your price. You can just offer some form of elevated value.
To know what is going to be most meaningful to your customers, you need to be in contact with them. Do your research.
Does this make sense to you?
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Great comments on pricing Dave and discounts also. My backround is hotel leadership so pricing was a daily conversation and working with IHG and Marriott in the early 90's I learned some great lessons. The concept of a best available rate was neither an increase or a discount but rather a price for that product when the custmer was considering booking and the terms associated such as pay now, refundable or not etc etc. Many of our clients in ticketing have not yet grasped this but have over the last 6-7 years in my experience stopped going on-sale with a discounted price for a period of time. Value in both B2C and B2B pricing based on the the customers POV is a key factor and recognising and rewarding great behaviours and long term fans and clients.