Navigating Discounts and Promotions, Protecting Your Brand

Welcome to Live With The Pricing Lady.

I'm Janene, your hostess.

This show is all about helping you build a sustainably profitable

business while making an unbelievable impact on your world.

Learn from my 20 years of experience and from my guests as we discuss their pricing

challenges, failures, and successes.

Pricing is a way of being or behaving in your business.

My mission is to help you confidently charge for the value you deliver.

Pricing is either hurting or helping your business.

Let's make sure it's helping you reach your dreams.

In this episode of Live With the Pricing Lady, we're talking about

navigating discounts and promotions, how to do it without undermining value.

Let me ask you, last time you gave a discount, why did you do it?

We're gonna look at that and more in this episode, so sit back, relax, and enjoy.

Hello, and welcome to this episode of Live With the Pricing Lady.

I am Jenny Liston, your hostess.

This show is all about helping you build more confidence when it

comes to pricing in your business.

We want you to focus on value and be profitable for the long term.

Today we're going to be taking a look at navigating discounts and promotions, how

to do it without undermining your value.

So let me ask you a question.

Have you ever offered a discount just to close a deal and then regretted it?

Yeah, I have too.

Early on in my business, I remember very distinctly one time having a discussion

with a client, and as we were talking, she was telling me the story about

how her finances were so constrained and all, you know, just a real.

Story about what was going on with her and I fell for it, if you

will, and I offered her a discount.

We closed the sale and then she said, okay, well I can't start for

three more weeks because I'm going on holiday to Jamaica for a few weeks.

And I felt like the size of an ant At that moment.

I thought, okay, actually she probably did have the money, but the priorities were

elsewhere and, and I sort of fell for it.

Now, that was on me.

But most people, at some point in time, if you are a business owner, you've

been in this situation where you, for one reason or another, offered a

discount and then regretted it later.

That's okay.

We learned from those mistakes.

I know I did, and I'm sure you have.

And if you haven't yet, you will soon.

So today, why are we talking about navigating discounts and promotions?

And I think this is really important because here's the thing.

Discounts and promotions can be very effective tools in your business.

However, in many small businesses, especially women-led businesses, they

are used reactively, not strategically.

So we do it as a reaction to some sort of discomfort in the moment.

Or as a reaction because we see, you know, everybody else is doing it, so

I should do it too, as opposed to it being a real strategic tool or tactic

that you're using in your business.

The problem with doing that is that discounts are the fastest way to

destroy value perception, to erode your profits and to attract the wrong

clients when they are not used properly.

So I want you to let that sink in for a moment.

They can be helpful tactics, but they need to be used strategically, not reactively.

Otherwise, it leads to profit erosion, a misconception of value,

and building the wrong client base.

So in this episode we're gonna take a look at three common challenges.

Actually, I think I have four, 'cause I added one at the last minute.

So three common challenges and then three tips that will help you

rethink your approach at the end.

I've got a little piece of homework, if you will, for you in this

episode, 'cause I want you to not just listen, but then think about

it in the context of your business.

So let's get started.

So challenge number one is the, so these challenges are basically the challenges

that people like you have in your business when it comes to discounting, right?

The first one is you're discounting out of discomfort.

Now I know a lot of my clients come to me and they are wheeling

and dealing with discounts a lot when they feel uncomfortable.

In fact, I remember I've had, well, I've had a few clients, but I remember

one very in particular who would.

Add a discount to the offer before she even had the

conversation with the customer.

So it was just like, 'cause you're a customer, you get a discount.

Not something I would advise, but that was her own discomfort and she was trying

to soften the blow for the customer.

But that was as a result of her own discomfort around this.

For example, if you feel awkward asking for money or you struggle with confidence

around what you charge your rates or how much you charge for your product or a

software, I. If you feel that awkwardness, that awkwardness can actually lead you

to giving out unnecessary discounts, and so you offer discounts to avoid

rejection or to even avoid feeling guilty about, you know, maybe what?

Charging something that you feel.

You might not pay, but maybe you're not actually in your

own target customer group.

Right?

Discounting out of discomfort is definitely one of the big challenges

that I see happening out there.

So the second challenge I see is using promotions as a crutch to attract clients.

Now, you might be sitting here thinking, well, Janine, isn't

that what promotions are for Y?

We say yin in German.

Yes and no.

Yin, yin, yin.

When you're not confident about your sales and marketing and your ability to attract

clients, you may turn to the gimmick.

Of promotions to try and get people in.

What's the problem with this?

So when you're using promotions without a strategic purpose behind them, it leads

you to attracting the wrong clients.

Clients who are not so loyal, who buy just for the deal, not for the

value that is being delivered through that product or service or software.

Right.

So using promo promotions as a crutch because your sales and marketing isn't

effectively, or you don't feel that your sales and marketing effectively create

demand can be a real problem because then you're not using strategic promotions.

You're using the more out of desperation, let's say challenge number three, not

understanding the financial impact.

This is a biggie if you follow this podcast you know, this is one of my

things that it's really important when you are offering discounts

from promotions that you understand the financial impact of that.

The challenge here is that you're not actually calculating what

you're giving away and understanding how that impacts your business.

What a lot of people don't realize is, you know, relatively small discounts can

lead to you needing to have a lot more customers or clients in order to get to

the same profit level that you were at or to reach that target that you have.

For example, a 20% discount in some cases might require 30 to

40% more clients just to help you.

Just to get you to that same profit point, not even to a place of earning more.

Now, it's going to be different in different businesses and different

situations, but part of your job is to understand what that number is.

So if you offer, if you lower your price by 10%, you should understand

what that means in terms of how many more clients you need in order to hit.

The same profit or more profit, understanding the financial

impact is very important.

The fourth one, the one that I snuck in here at the end, is over

customizing offers and ad hoc discounts.

A lot of times what people will do is they will, offer a discount

just to get someone to say yes.

So it's a little bit similar to the first one in terms of

discounting out of discomfort, but sometimes it's not just discomfort.

Sometimes it's, you know, I. Fear of losing that particular client or sale, and

there's no strategy again behind it, and there's no consistency behind it as well.

This is a big one I often see with service-based businesses is they end up

giving, discounts out willy-nilly with no real strategy behind it or consistency,

and then they end up having, 20 different clients who have 20 different prices.

And then it gets really difficult for you to manage internally in your business.

And you also then run the risk if customers or clients talk to each

other of them, finding out that they have vastly different prices.

And it was just because at that point in time, you granted a

discount without really having a strategy or a purpose behind it.

I actually had this recently with a client where, you know, the two, this

person's clients were actually part of the same larger business, but they

worked independently and they had two very different rates from my client.

Her client was talking about it amongst themselves and then she had to go

and deal with that awkward situation.

So again, if you don't have a strategy, then it's hard to be consistent about

what you're doing and you can get yourself into some difficult situations.

So those are just a few of the challenges.

What I'd like to do now is move on to a few tips for you.

The first tip is know why before you're making an offer

for a discount or promotion.

You need to know your why.

What is the intention behind this?

I remember years ago I had a client who I was working with in

one-to-one, and she sent me an email.

And in the email was a list of promotions and there were probably,

I don't know, maybe eight or 10 promotions listed in there, and

I opened it up and looked at it.

I was like, what the heck is this?

We never talked about it.

And she had promotions for all kinds of things.

I mean, I, okay, maybe I'll be exaggerating a little bit here,

but it was like Valentine's Day promotion, black Friday promotion,

and the Easter promotion.

It was just like all these different sort of disconnected.

Reasons for offering promotions.

She was in the health and wellness area, so I couldn't really understand

what a Valentine's Day promotion was really going to, how that was

going to align with her business.

So then we had a conversation, okay, what is the intention?

Why are you offering each of these promotions?

And she was like, well, that's what I see other people doing.

And to me that is not a good reason to be offering a promotion.

So ask yourself, is this strategy?

Is this promotion or discount?

I'm a offering.

Is this a strategy or is this a reaction?

If it's a reaction, then chances are there may not be a valid

reason to be offering that.

You have to like think that through and understand it.

So discounts of promotion should be used to meet a clear business

goal, like a new launch, an early bird testing a new market, but not

because you're unsure of the value or because you are afraid of something.

Those are not really good reasons to be offering discounts.

And of course.

You know, it happens from time to time.

What I'd like or what I'll challenge you to do is to find ways to put

more rigor into it for yourself so that you're doing it more

strategically as opposed to reactively.

Tip number two, set clear rules for when and how you offer discounts or promotions.

So discounts especially.

Well, no, both, but I'm gonna focus on discounts for this one.

Should be decided in advance.

Yeah.

So what kind are you gonna offer?

Is it a early bird?

Is it a loyalty?

Is it a bundle?

How often will you offer it?

And what are the conditions under which you'll offer it, and are there any limits?

These are very important things for you to have outlined for your discounts

or promotions when there's strategic.

I would add one more thing here, that if you're doing a promotion,

there's usually a specific goal.

You wanna get a certain number of sales.

If you're a product-based business, you might wanna get rid of some inventory.

If you're a service-based business, maybe you do it at a low time,

you know, low a period where.

You don't usually have a lot of work, so you're trying to

pull work in with a promotion.

If it's not helping you achieve that goal within a certain timeframe, then

you shouldn't be doing it anymore, right?

You should set up a goal around that promotion for yourself and

make sure that you achieve that.

And if not, then you either need to just.

Or do away with it and try something else.

Set clear rules for when and how you're going to do discounts and promotions.

And I talk about this a lot with my clients as well when it comes

to discounting services or if you know you're gonna have a negotiation

before you even send the first offer.

You can think about, okay, if they come back to me and

object, what am I going to do?

It's important to consider, not discounting, but adding something of

value instead, or having an alternative offer for them that's at a lower price

point, because then instead of saying, oh, I feel like I have to this offer a

discount, you can say, well, we can take this out Or I have this alternative offer.

Would you like me to tell you about it?

Because it suits your budget better.

By adding value or having offers at different value levels, you

can actually navigate those discussions much more easily.

Okay, tip number three.

Because I already did tip two and tip one almost twice.

Tip number three, build pricing confidence, so you feel less

likely to need to offer a discount.

Yeah.

The more confident you feel about the prices that you offer and the better you

understand the value of what you offer, the less likely you are going to be

inclined to offer a discount unnecessarily or promotion when it's not needed.

First of all, what are you gonna do to build confidence?

You're going to know why that is the price that you're offering.

That's very important.

If you can't answer the question, if you meet me and I say, why are you offering

this price and not another, and you can't answer that question confidently,

then you need to figure out why that's the right price for your business.

You need to understand the economic value that you bring.

Or that your offer brings, or your product, or your service, your

software, you need to be able to communicate that value effectively

and practice pricing conversations.

Those are ways that you can build your pricing confidence.

So how do I wanna wrap this up?

First of all, I wanna say discounts and promotions are not bad.

However, they need to be part of a well thought out strategy, not

just something you do because you feel uncomfortable or fearful.

You need to understand and know the impact of that as well.

So it needs to be part of a strategy, but you need to have also thought

of and, and understood the impact.

So I said at the beginning, I'd have a little challenge for you,

a little homework for you here.

And here's what I suggest you do.

I invite you to do.

Yeah.

And that is to think about the last three discounts that you offered.

If you don't do discounts, you do promotions, you can do the same thing.

Think about the last three discounts you offered and then do three things.

One, ask yourself, why did I do it?

So was this strategy or was it reaction?

Yeah.

So why did you offer it?

Was it strategy or reaction?

And what could you have done differently that would help you hold the value?

Remember that discounts and promotions should be profitable, purposeful, and

aligned with the value that you deliver.

That's what I wanted to share with you today.

I wish you all the best.

Please head on over to the pricing lady.com/set my prices because

the next cohort of the Fair Price formula is coming up soon.

And if you wanna understand how to set prices you can truly believe in, then you

are going to join me for that program.

All the wish, you all the best.

Have a great day and as always, enjoy pricing.

Thank you for listening to this episode of Live with The Pricing Lady, the podcast.

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At ThePricingLady.

com you can download a copy of my Self Assessment Pricing Scorecard.

Find out where it's going well and where you can begin improving.

Or just simply book a discovery call with me.

There we can discuss what's up with pricing in your business and

how I might be able to help you.

Thanks once again for joining.

Remember, pricing can hurt or help your business.

Let's make sure it's helping you reach your dreams.

See you next time and as always, enjoy pricing.