Dropping your price devalues your business

January 7, 2019

The high street has endured one of its most challenging environments since the 1970s.

The steady move to online shopping has been further impacted by low wage growth and – to kickstart the New Year – an increase in rail fares.

The restaurant industry has been one of the worst-affected, as under-30s eat out less but have restaurant food delivered to the comfort of their own home instead via Uber Eats and Deliveroo.

What’s the problem with Uber Eats and Deliveroo?

While they’re obviously useful to customers, for the restaurants it’s a different story – they have lost their capacity to up-sell. It may be the starter or dessert that go unordered, and the bottle or two of wine is definitely missing from the customer’s bill.

Yet, across both retail and service industries, the solution seems to be the same: huge discounts to entice customers back.

As an example; there are restaurants in Liverpool who were offering 50% discounts for the whole of January. Birmingham fitness trainers used Groupon to offer 70% off and some Manchester physiotherapists are offering a whopping 90% off a 45-minute session.

But what does this actually achieve? It certainly isn’t sustainable. This is why businesses are dying!

The customers won’t come back

Studies have shown that as few as 12% of customers who use a company at a discount price, return to pay the full price for a similar item or service. It’s obvious that any customer who has had 50% off their meal is more likely to shop around for a similar deal than return to the same place only to pay double the next time.

But it’s a scenario that businesses on and off the high street return to time and time again.

The result is that the businesses are devaluing their own products and services. Do they really expect customers to think highly of their business if it is suggested that it could be sold at half the usual price?

Such discounts used to be easily accommodated by larger brands, but look where those brands are now. House of Fraser is no more, Debenhams is on the brink and Next has closed stores just to stop going bust.

Stop it! Do something different

The days of devaluing or heavy discounting are over. Argos adapted to a change in customer spending and it is in effect a logistics company now, but it’s a profitable one. Its focus changed to the customer experience and when items available. It’s the convenience of availability that is helping it thrive.

Small businesses should look at what experiences customers are looking for. If a customer needs to see a physio or wants to have a fitness trainer, it’s not necessarily the cheapest that they’re after – it’s the one that can fit them in. It’s the same with the dentist: if you’re in pain, you care less about the cost and more about how soon the pain will be gone.

Suddenly, being available is the unique selling point.

Now, what’s the best way for businesses to let customers know they’re available?

That’ll be the free me:now app, which lets businesses tell new and existing customers when they’re free. Don’t just drop your prices to try and entice people who will never use you again. Instead, use me:now to promote your availability and snap up the people who really need you, and will remember you next time for the right reasons; your great service.

Find out more about how me:now works.