Deadly Discounts: 3 Reasons To Manage Your Customers’ Expectations

Deadly Discounts: 3 Reasons To Manage Your Customers’ Expectations

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Sale! Marked-down! Reduced to clear! Priced to go! These (usually) bright red signs signal a saving that draws customers to shops like moths to a flame. But what works for a clothing retail store may not necessarily be the best tactic for your fast food franchise. After all, food is more frequently consumed than clothing is purchased.

In a recent survey of its franchisees, McDonald’s found that discounting across the board was a pain point, hurting their franchisees’ pockets. “Kick the discounting addiction. Focus on profitable sales, not just customer counts,” one franchisee suggested.

Discounting is a great way to attract customers, but an even easier way to drive them away if they can’t afford your items any other time or your quality decreases along with your prices.

Related: Want To Leave Customers Grinning And Vowing To Return? Do The Following

Here are some of the factors to keep in mind before enforcing a franchise-wide special:

1It could push up pricing of other menu items

Going to Spur on a Monday for their two-for-one burger special is a thing of the past as of April 2017. While the special discount increased sales on what would have otherwise been a quiet Monday evening, coupled with other weekday specials, Spur was losing money despite the rise in clientele.

The result was raising the price on other meals to make up for the loss, says the restaurant chain’s founder and executive chairman, Allen Ambor.

“We were over-discounting for a long time and we had to stop,” he says, adding that as of July, the prices decreased.

When deciding on special discounts, ensure it isn’t to the detriment of the rest of your sales. Even if your customers come for the burger special, there are those who will think twice about buying from you on other days of the week when pricing is higher than what they are used to.

2There’s a danger of devaluing your product

danger-in-devaluing-products

A billboard on her commute route has finally convinced the mom-of-three to give into her children’s pleas for a fast food dinner on a mid-month weeknight. She goes to her nearest KFC drive-thru and is surprised to learn that the special is over.

‘Are you sure, because I saw it advertised,’ she says. No, it’s definitely over, is the response she gets. So she drives off to get something cheaper elsewhere.

Offering a discount on a popular item to entice customers into your shop expecting them to buy other products at their normal prices is a common tactic, but not always a successful one.

“Many bargain hunters are only interested in chasing the lowest prices – they might not come back to buy the goods you’re selling at full price,” notes Viresh Harduth, ‎vice president of new customer acquisition (Startup and Small Business) at Sage Africa and Middle East. This results in having to sell at a loss for no benefit.

Related: Get Into Your Franchisees’ Good Books: 4 Ways To Communicate Better

3Higher quantities could decrease quality

How many times have you arrived back from your favourite fast food joint with their latest creation, only to discover they left out the sauce or there’s a limp piece of brown lettuce in the middle?

Imagine if one of your customers had to experience this after being enticed to your product with the promise of more than what they have just bought.

“To sustain discounted pricing for a longer period, you might need to compromise on the quality of your ingredients, components or customer service,” says Harduth.

This has the potential to damage customer satisfaction and future sales more than selling a quality product at a reasonable rate..

Diana Albertyn
Diana completed a BA in Journalism in 2010 and has honed her skills as a newspaper reporter, senior communications specialist and most recently worked at a weekly magazine as a writer. She joined the EMTS Group in 2016 as a writer for Entrepreneur magazine and SmartCompany Networks. Passionate about honing her writing skills and delivering exceptional client results, Diana continues to keep a finger on the pulse of industry news and insights.