Here's the problem:

"You only need to take a walk around your local shopping centre to see how Australia's retail sector is travelling.

At my local centre, the sales and discounts never end. Discounts range from 10% to 70%, and even in the supermarkets, where thinner margins mean discounting is harder, big price drops are plastered all over the shelves. .........

What really worries me about this prolonged period of discounting is the impact it appears to have had on the psyche of consumers.

As many retail experts have pointed out, customers are simply no longer willing to walk into a store a buy. Every product - from books and clothes to televisions and electronics - needs to be researched with thorough price comparisons.

A customer might start by checking out the best price online, and then, will continue to shop around until they've secured what they believe is a bargain.

Through relentless discounting, retailers have effectively trained customers to become bargain hunting machines.

The question is: How do retailers reverse this? Can they even do so?" (Source: Retail Rout - smartcompany.com.au)

It's not just in retail. Discounting is rampant.  And from reports I've read overseas the situation, where the downturn is more drastic, the situation is worse.

When discounting is overused it not only loses its effectiveness but you train your customers to only buy when there is a discount.

You know that discounting is death; in effect you're saying your products are not worth the asking price, that they are not "value".  Noted British marketer Drayton Bird put it well - "When you keep discounting, you are not just training people to expect bribes; you are telling them "what we offer is not good enough to sell on its merits." You are degrading your brand."

So how can you reverse this situation, as the article asked?  Notwithstanding the times there are some positive steps you can take to retrain your customers:

• Instead of discounting your prices, think about what bonuses you can give out. A good bonus will usually out perform a steep discount.

• Position yourself as the expert in your field. Customers expect to pay more for genuine expertise.

• Give a reason - If you're indeed compelled to give a discount, make sure the customer knows the reason. Give a logical acceptable reason. It may be your Aunt Maisie's 89th birthday, but give a reason.

• Differentiate - Always say something that strengthens your brand. Explain how what you do or provide is better than what others do. Don't just focus on the discount. That's from Drayton Bird again.

• Training - improve your salesmanship and marketing. Because price is product of salesmanship and marketing, not of intrinsic value, it is vitally important to continually improve, strengthen and sharpen your sales and marketing expertise and confidence.

It is important to retrain your customers for many reasons. Those at the upper end are less vulnerable to price-based competition than those at the lower end; you build a more secure business. You can make your desired income with fewer transactions and fewer customers.  You deal with a better customer. You also have happier customers.

Start shifting perceptions back again, away from you being a discounter to a business that provides value that customers are willing to pay for.

© Copyright 2010 Adam Gordon, Profits Leak Detective