Should You Offer a Discount to Gain a Customer?

Savvy business owners know that the secret to retail success is gaining repeat customers who are loyal to their brand for years. After all, a single customer makes just one purchase, but a loyal customer makes repeated purchases and adds significant value to a company's bottom line. Should you offer a discount to recruit these loyal customers? Before you start slashing prices, consider the pros and cons of taking this action.

There are numerous methods business owners can use to recruit loyal customers. Some retail businesses have programs that make it easy for customers to make repeated purchases, such as Amazon's Subscribe and Save plan, which allows customers to set up auto purchases of their favorite items. Some businesses create specific products that draw loyal customers back into the store, such as Starbucks' annual Pumpkin Spice Latte.

Some retail businesses offer a discount to gain customers. This technique works to get people to make purchases, but it might not always inspire long-term loyalty.

As the Nexxt article "Are Discount Sales Good For Your Sales?" noted, discounts are great for getting bargain shoppers in the door, but they are less effective when it comes to attracting long-term, loyal customers. You may gain a customer with a good bargain, but that customer may walk away as soon as another store offers a lower price.

Likewise, Inc.com's article "The Correct Way to Offer a Discount" reminds business owners that if they push the discount too heavily, customers may begin to distrust the business. People know when businesses are desperate for sales, and shoppers tend to avoid businesses that appear to be trying too hard to close the deal.

If you offer a discount to gain a customer, you need to have an additional strategy in place to retain that customer after the initial purchase. Some businesses work to retain customers by offering reminders in the form of email messages containing coupons. Others use targeted advertising to suggest the purchase of items. Some retail businesses go as far as to invite their customers into the store for special events, such as a one-day promotional sale.

Savvy business owners know that once they offer a discount, they need to back up their low prices with high-quality customer service. Since so many organizations sell similar products, the quality of customer service is a major factor that dictates whether or not a customer decides to frequent a business.

Should you offer a discount to gain loyal customers? This selling strategy does work, but only if you combine it with additional incentives that make customers want to remain loyal to your business. Combine the occasional discount or sale with targeted advertising, email campaigns and other tools to keep your business in your customers' thoughts. Don't forget to offer the highest-quality products and best possible customer service; these often matter more than a one-time discount.

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