Drop or Wait?

Here are two sides of a classic business debate: In slow or down times is it better to keep your prices stable and be patient for the market to rebound or discount rates to drive new and more revenues?

On one side we have those who say if they drop rates they’ll have a tough time raising them when the market gets better. They also claim that dropping their rates will cut into profits and hurt them in lost profits. Essentially they figure the consumers may indeed come but they’re not going to make enough to cover the drop … so they’re working harder without the payback.

On the other side we have folks who say they can’t afford NOT to offer discounts. They need cash coming in and they have to keep their trained and staff gainfully employed or risk losing them. They paid to train their staff and now, through no fault of their own, they risk losing their investment and a member of their team. So, discounts there will be. And maybe they attract “new” customers with the lowered rates and they cross their fingers hoping those new buyers will stay with them when the rates return to normal.

My thinking takes the side of the business owner willing to take positive action in holding onto his/her team… gaining new and more customers thanks to a lower price. But I only choose to side this way with caution and a few considerations:

1. Remember there’s nothing worse than training someone to do their best work for you and then have them go elsewhere or (gasp!) your competition. You lose twice. Your great employees are your most valuable asset. They are a real part, the real personality of your culture … to your mission in driving personal service that blows people away. Invest in and hold on to your team.
   
   
2. Make everyone a sales person. Regardless of their tasks or job titles or even the number of employees you have … everyone sells. In and out of your business, wherever they go, you can’t ask for better spokespeople than your team. They are your business ambassadors in the halls, at home, on FaceBook, with their families and friends, everywhere.
   
   
3. Be selective in your discounting. Months ago I helped my health club target new clients for a new startup. This club needed to grow its business fast so we focused on specific and targeted market segments, folks who needed to maintain good health for their lifestyles/jobs and who could maybe spread the word to their coworkers and associates. We offered intro-priced and time sensitive memberships to local fire and police professionals, mail carriers, teachers/professors and student athletes (colleges, high schools and AAU type sports orgs for kids).  By targeting these market segments we could control the volume of the discounting and could keep a tight timeline on the length of the offer.
   
   
4. Be aggressive. Be creative. Don’t let your discounts last forever.  You have the staff and VALUE added benefits that will make your newest customers stay with you for more than just price … they need to want to pay a little more because you offer the most value. Out-perform, out-personalize your competition and you will outlast them. Remember, you never cut your service or value proposition when you lower your price. When you continue to execute at your highest level, everyone wins. In every economy.