The Dreaded D Word: Managing Loyalty When Customers Request Discounts
Discounts are great news for your clients and customers, but not so hot when it means your company takes the financial hit. What do you say when a client or customer asks for the dreaded D word? How can you retain loyalty without allowing continual discount requests to affect your actual profits?
Be Clear
Be clear about your discount policies and what your normal prices are. The more transparent your company is in terms of pricing structure, the less likely it is someone will ask for a discount. And the more transparent the discount pricing structure is, the less likely it is someone will ask for more. Ensure your discounting culture is non- negotiable – for instance, at a set rate of 15% off normal prices for a loyalty discount.
A Two-Way Street
A discount should only ever be applied when it’s ‘a two-way street’. This means that you should be benefiting from it as well. Whether you benefit from large orders, from having lower transport costs because they are local or perhaps because supplying your goods or services to them is more straightforward than with other companies, all of these things are saving you money in one way or anther and rightfully deserve a discount on your normal prices.
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Ask Why
Rather than simply saying no, ask why. According to US entrepreneur Jurgen Apello, rather than saying no, ask why. They may make you think of a reason you should apply a discount, but it’s more likely they’ll realise why you shouldn’t.
Accounting for Discounting
Provided you apply discounts only in these certain instances, and at a set rate, then you can forecast for such discounts and account for them, which means they won’t affect your profit and loss.
Discounts needn’t be dreaded if you use them as they are intended, and in fact they can really benefit your company when applied correctly.
Discounts shouldn’t affect loyalty either, as it should be loyal customers who are mainly rewarded. A clear discount policy will encourage loyalty, as your clear pricing structure will give customers a reason to be loyal and will also demonstrate your own transparency.