How Discounts Can Make Your Business More Efficient
Incentivizing customers with a discount for changing their behavior can help you increase your productivity.
Offering customers discounts on their purchases to boost sales and profitability often has the opposite result.
You can increase your revenue in the short term, but as your customers get used to your discounts, they will base their purchases on the timing of your rebates, which could permanently crush your margins. You may end up making even less profit than before you started discounting.
Discounts Can Help You Become More Efficient
But there may be a few limited circumstances where discounting can make financial sense.
Imagine your customers were to commit to your services for 12 months instead of monthly. Or they booked their appointments on a specific day instead of choosing them freely.
Could you save time and money by better spreading your workload or reducing travel time between stops?
If your answer is yes, incentivizing customers with a discount for changing their behavior can make financial sense.
For example, a mobile dog groomer could offer a discount to customers who book their appointments on a specific day when the groomer is in the area and for multiple grooms in advance. The mobile groomer would benefit in two ways:
Reduce travel time between stops, which could increase the number of dogs they could groom that day;
Improve visibility into the workload ahead, which would help balance their staffing level.
Software companies are another good example. They often offer significant discounts for one or two-year commitments, even without you having to pay the entire amount upfront. If you like a particular software and have made it a part of your workflow, I recommend taking advantage of these incentives.
Share Your Savings, But Don't Give Them Away
Letting customers participate in your productivity improvements can motivate them to make adjustments on their end.
However, sharing your savings doesn't mean you should give the entire amount away.
I recommend setting the discount so that you can keep 50% to 75% of the financial gain.
You can also pair the rebate with rewards that don't cost you anything, such as giving access to exclusive content, invitation-only social media groups, or priority booking.
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