Since we touched on pricing, I want to briefly discuss discounts here. I generally discourage discounting as it devalues your offering. Here are some other creative ways to approach it:
Giveaway
Instead of reducing price (which reduces perceived value), consider offering a giveaway (which adds perceived value). For example:
| Option 1: Discount | Option 2: Giveaway | |
|---|---|---|
| 10hrs of service | $100 (at $10/hr) | $100 |
| 20 hrs of service | $180 (at $9/hr) | $200 + 3 free hrs |
| 40 hrs of service | $300 (at $7.5/hr) | $400 + 13 free hrs |
Besides offering more of your primary offering, you could also create low-cost secondary offerings you can give away, further enhancing your customer’s experience.
Flexible payment
During COVID-19, many businesses and individuals reduced spending due to decreased demand caused by lockdowns. Layoffs and increased costs due to inflation only exacerbated the situation. If you’re a seller, instead of lowering pricing to incentivize purchases, consider offering flexibility in payment terms (how vs. when they can pay). This might include allowing prospects to buy-now-pay-later (BNPL) by financing their purchase in installments or sharing in the risk and reward (if appropriate), such as accepting shares or revenue sharing in lieu of upfront cash.
Guarantees
During the 2008 recession, Hyundai introduced a job-loss guarantee: if you lost your job within a year, you could return your car and walk away from your loan obligation, with Hyundai covering most, if not all, of the difference. This addressed prospects’ fears and concerns during that period of economic uncertainty, enabling them to continue selling cars without the need for discounts. This move gave Hyundai a significant advantage over many other automakers.
Hyundai reintroduced a similar program during the COVID-19 pandemic. Their Job Loss Protection Program offered a 90-day payment deferral on new purchases and provided up to 6 months of payments for new buyers in the event of job loss.
Focusing on retention during downturns
If all else fails and additional concessions fail to aid with acquisition. Your remaining option is to slow down and take the time to improve your customer’s experience. Consider providing white-glove service to existing or new customers during this period, a more hands-on, personalized, and customized level of care. This ensures you make up for higher Customer Acquisition Cost (CAC) with higher Lifetime Value (LTV).