Is there anyone out there who hasn’t heard a parent utter the golden rule? Treat others the way that you would like to be treated.
Well, okay, my father once said the golden rule was “those who have the gold make the rules.”
While the former golden rule is the more prominent and accepted one, the latter seems to be the one that newspaper companies follow.
Except that newspaper companies’ gold is long gone.
Though the newspaper industry’s need to change its business model has been painfully obvious for years, the industry has clung to past practices.
One of these practices is to give new customers a better deal than existing ones.
Newspaper companies routinely offer steep discounts to lure new subscribers and then revert to their normal rates after a specified time period, often six months.
Six months is a nice long time to get used to the low price, however, and then feel demoted to second-class-customer status when the price more than doubles on the next invoice. Newspaper companies count on your desire for the paper to outweigh your aversion to paying so much more.
They didn’t count on my father, however.
My father is a savvy business executive who retired with his negotiation skills as sharp as ever, and few places to exercise them.
I’m not talking about junior stuff, like changing the name on the paper from his to my mother’s. Nope. I’m talking about extended phone calls that went up the chain of command with The New York Times sales team. Over time he has wrung discount after discount from them. Every six months or so, another phone call. My mother is a loyal reader, and Dad has gotten deal after deal to have that paper delivered wherever they are.
The NYT sales team is no match for his arguments, which in truth they are lucky to hear. They are lucky that my parents didn’t ditch the paper long ago. They have not made it easy.
As a result, Dad has not been easy on them. It’s cost them time and effort.
How much time and effort? Last fall a manager from the NYT sales team called to inform him that they were granting him a lifetime discount.
No joke. It’s true.
But few customers have Dad’s tenacity. And why should they?
Here’s the idiocy of it: selling more to your current customers is always less expensive than marketing to prospects. So the profitability of these customers’ purchases is higher.
Many business owners and marketers have a tough time resisting the temptation to use discounts to lure new customers. They don’t realize that this method can cost you more when you market to people based on price, instead of value. You condition customers to value your product or service less.
Remember the first golden rule about treating people (customers) the way you want to be treated? It still reigns. Would you want to pay more knowing that new customers get a better deal?
Pet peeve alert here people: Always give your best deal to your existing customers. Always.
How do you resist the discount-as-bait temptation? Here are three options to consider:
- Offer free samples. Not six-month supplies, but a few free samples. When the sample is free, it is a goodwill gesture that allows the consumer to try the product or service risk-free without diluting its value.
This strategy works well for food and beverages, consumer goods like shampoo, razors or makeup, and services such as lawn care, painting or even construction (think free assessments).
- Create an entry level, lower priced offering. If your product or service is pricey, is there a lesser one that you could provide to let prospects try you out but that could benefit customers as well? This would be different than your full-fledged product or service, so that you allow prospects to know, like and trust your offerings without diminishing their value.
Restaurants do this often with appetizer or happy hour specials. One Sunday School that begins full-time in first grade created a monthly kindergarten program to introduce the school. Some interior decorators offer redesign services that help clients redecorate with items they already own.
- Structure your deal to include your customers, and get them to advocate for you. This is the holy grail of promotions. Word-of-mouth is the strongest endorsement you can get. Creating a promotion which motivates your customers to become referral sources can bring new customers who are more ready to buy and more likely to buy again.
HYP Studio, a yoga and pilates business, offered a New Year’s day Groupon which allowed anyone to get five classes for $30. They limited the offer to one for the buyer and one that they could gift. What a great way to motivate those new year’s resolution makers and get them to bring their friends!
Find ways to include your customers when you make a special offer. Show them the love. The goodwill will come back to you exponentially. And the profits will too.
It makes sense, doesn’t it? It all goes back to the golden rule – the one about treating others as you’d like to be treated yourself. And the treatment is the issue as much or more than the money. Nobody likes to be excluded.
As for my Dad, he’ll have a little more time now that those semi-annual NYT calls are no longer necessary.
I wonder if he’ll ever get the Wall Street Journal to come around!