As I’ve written before, much of the marketing ideas that come through our door have to do with offering coupons, discounts, or other promotional specials, either as the main point of the marketing, or as a means of measuring the response to the marketing. Everyone wants to be free with our money, it seems. And why not? No matter how they talk, they’re more interested in their business’ success than ours.
Is offering discounts or coupons a good way to measure response? Perhaps. But what they all tend to leave out is that you are using them as a means of drawing customers away from your competitors. When you go that route you are competing on price, which is almost always a losing game, especially for small businesses. The bigger guy with the bigger volume is always going to win.
When you start playing the discount/coupon game you may indeed see a boost in business. The trouble is, you have to keep offering those price breaks just to keep the same people coming back. You’re not building brand loyalty, you’re rewarding bargain shopping instincts. You always get more of what you reward. To quote Admiral Akbar from Star Wars, “It’s a trap!”
That’s not to say you can’t compete on price at all. But only do it if you can afford to do it consistently–all the time on every product. We regularly get customers who ask us if we do some sort of loyalty card program or the like. When we explain to them that it’s already built into the price, and that to offer a program we’d actually have to increase our prices, they get it. They get it, because if they’ve been paying attention, they notice our prices on most items is at least a little lower than our competition that does have such programs.
But when we sat down to plan our business, we knew we couldn’t compete on price alone. We had to find other ways to compete. We identified four different areas of competition, and evaluated both our competition and what we thought we could do. Initially at least we knew we wouldn’t be able to beat anyone on inventory. We also knew that at least one competitor could potentially beat us on the trade-in values we offered on games. But our business model showed we could potentially compete on our pricing, and we figured we could also beat everyone else on customer service.
Those two areas are what we focused on, and especially on customer service. In our evaluation that is one area we felt our competition were consistently low on, and open to exploitation. We also felt that it was one of our strengths, as two of the three of us have a reputation for taking good care of customers (I’m the odd man out, having no reputation in the industry for good or bad).
That focus on our strengths has worked well for us so far. It’s fun to see faces light up when they come into the store and recognize my partners from the previous places they’ve worked. Almost always it’s followed quickly by a “Dude, I’m so glad I found you guys! I’m shopping here from now on!” We’ve even see many people place special orders with us, even though they could get it cheaper elsewhere, just because they want us to get their money and not some of the other stores.
So why should we play the Russian Roulette game of discounts, coupons, and promotions? Bargain hunters, while they will do well at our store usually, are not going to stick with us anyway. They’ll be off in pursuit of the best deal in no time. It’s the customers for whom price is not the only factor that we’re after. It may take longer to find those people, but if we continue to play to our strengths, it won’t take nearly so much work to keep them.