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“Open House” Discount or not to discount…

May 27, 2010
Filed under Aftermarket

At a recent open house I attended, the dealership put a 20 percent discount straight across the board on all apparel products sold that day. They made signs in bright green paper and hung them on the walls and fixtures. As a result, the store looked like it had large green markers everywhere. Unless you really took a moment to focus on the signs, you as a visitor didn’t know what they were about.

I don’t believe percentage discounts create a sense of urgency in most cases. A lot of customers don’t like to figure out discounts. They don’t think in terms of having 20 percent left on a credit card or checking account balance.

By 11 a.m. people were starting to try on apparel. I overheard other salespeople offer the discount like it was a bonus before the customers had decided to buy. The 20 percent discount offer, however, did not automatically close the sale.

I did have people ask if there were any specials going on, and I informed them about the green signs with the 20 percent off apparel purchases. Maybe it’s a lack of trust, or maybe they hoped to get an even better offer. I don’t know, but for sure the signs had no effect in creating impulsive sales. I spoke with the store staff around 1 p.m. and asked if we could take the signs down. If a customer asked for a deal, then I could say, ”I can get you 20 percent off today.” Maybe the idea of asking for a better deal and getting it this way is more satisfying than if it’s offered up front.

My suggestion is to only discount stale or old merchandise in a specific area of the store. Pick a dollar amount for some leader items for your event, a whole dollar amount like a widget for $19.99 (normally $34.95) — this pricing good for today only. Purchase items for your open house only. No need to discount good bread and butter items that would have sold anyway.

Keep it simple, keep it focused! I know it seems easier to discount everything, but customers really don’t care, and you give away too much money on a day you’re trying to pump up your cash flow.

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