Sales and discount fatigue

Monday, 02 May, 2011

The actions of businesses, retailers in particular, have pushed consumers and clients to a tipping point. Sales and discount fatigue is in evidence everywhere. That is a new phenomenon.

Consumers now state that the appeal and allure of more and bigger discounts are marginal. Those savings will be readily accepted. However, only 31% of adult consumers in a recent Australia-wide survey stated that they would buy more if offered a further 40% off the already discounted prices.

Enough is enough! Too many businesses have shown their hand and the stack is lacking an ace card. Price is not the overriding issue in determining and influencing the volume of marketplace demand. Utterances by leading high profile retailers about price deflation is compounding the complexity of a brittle, volatile marketplace. Declining price structures are enough to induce consumers to delay purchases... and to be financially rewarded for doing so.

Significantly, consumers openly declare that they do not feel happier, more satisfied or have greater brand or business loyalty because of recent purchases which were concluded at greatly discounted prices, often up to 40% off normal. Rather, there is a sense of unease, which is difficult for them to explain or to express.

In short, current practices are not establishing or sustaining a "win-win" sense of well-being.

Packaged offers of "two for one", "buy one, get the second at a discount" and similar are not achieving incremental sales, enhanced customer satisfaction or greater loyalty.

Some will defend the practices with the contention that revenue levels are being defended and sustained. There is no credible evidence or basis on which to found those beliefs.

Short term, reactionary initiatives do and can have profound implications and ramifications for brands in the intermediate and longer term.

Business people have been slow to recognise and effectively respond to the new consumer mind set.

Bold banner headlines of "30, 40 and 50% off" hold little credence with most consumer groups. Conversely, full or normal retail prices are considered "irrelevant" "premium" or "unrealistic".

One structural change which has been effected by the consequences of the Global Financial Crisis (GFC) is that references to "discount" and "40% off" are misleading. The reality is that the current discounted and sales prices are now the "new price". Astute leaders will quickly accept, grasp and utilise that new paradigm.

Since the onset of the Global Financial Crisis, competitors of all sizes and hues have felt compelled to match the rampant discounts on offer, often by major duopolistic national and transnational entities. It has proved to be a fruitless exercise, lest one enjoys and accepts unprofitable profitability. Emphasis has been placed on cashflow, rather than sustainable margins, brand integrity and value. The greater resources and deeper pockets of the few leviathans have ensured that advertising, marketing, promotions and price advantages lay with the few and the big.

One of the viable, attractive and compelling competitive advantages available to the multitude of small and medium sized enterprises resides with exceptional customer service.

The challenge is how best to entice customers and clients to deal with an individual business to enjoy the benefits and advantages of personal service. Fundamental to addressing that reality is the recognition, acceptance and deployment of the new nature and characteristics of service excellence.

Most important, the service promise begins with a striking and responsive presence on-line. Far too many businesses around the world have no, inadequate, static or a boring presence on-line. In the contemporary world, that speaks volumes to discerning, demanding, time-poor and communicative prospective, existing and past clients.

Service expectations and experiences begin and develop from the first point of contact.

This underscores the fact that an overwhelming majority of customer service initiatives and training are ineffective and irrelevant. The issue is not the process, but rather the expectations and the outcomes that determines customer satisfaction.

Little wonder that customers and clients repeatedly declare "You don't understand".

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