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The DFS effect - what happens when you're always on sale

The DFS effect - what happens when you're always on sale

December 14, 2010 by Lucy Whittington

I see it all the time. I even take advantage of it. Some businesses have too many discount sales and special offers — in fact it can seem like a permanent sale. I call this the DFS effect.

But what happens? No-one buys at full price.

Now it is, of course, very tempting to drop your prices when you have stock to move, and I am not suggesting that you don’t ever have sales, just don’t have them all the time.

If every email you’re sending out to your list is just what’s on sale, or that you’ve knocked so-and-so-many per cent off “this weekend only”, and if you send them often enough, it’s not going to take long to wipe out all your full price sales.

There is a certain children’s mail order company that I often use to buy things for my small people and I know that I only have to hang on for another week or so every time I want to buy something and sure enough a discount voucher will plop onto the doormat through the post. I am regular customer and so I know I don’t have to wait long. Now what’s silly about this is that yes I do buy when I get my discount voucher, but the business has lost my momentum, and also the cash I was ready to part with “on the spot”.

Now for a big mail order catalogue, or a large chain of furniture stores (ahem!) the continuous offers and discounting is part of a major marketing plan, but if you’re a small business you don’t always have the luxury of bigger margins and a constant flow of orders. If you’re a smaller business you value every sale, and all of those that are not at full price just mean you have to work harder or sell more (or both!). You also then set a precedent that your prices are not “real” but “inflated” (yes I know those DFS sofas were on sale somewhere for a week at £1500 but no-one was buying them, right?).

So stick by your guns and don’t be on sale all the time. Think about value-added offers instead, or extras you can include. Once you lower your prices (which is effectively what you do when you’re always on sale) it’s really hard to push them back up again to the same customers. Then you’re left with either finding new customers, or accepting that you’ll only ever be able to sell for less.

And don’t even think about offering five years interest free credit if you’re a small business either! Money up front thank you very much.

 

Lucy Whittington is an expert contributor to Marketing Donut and is director of Inspired Business Marketing.

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