Use Discounting to Attract New Clients
Say the word “discount” and it conjures up violent, knee-jerk reactions in the minds and hearts of practice managers and owners.
“Never, never, never discount!” is the typical reaction:
• it cheapens the profession
• you’ll never be paid what you’re worth
• you’ll never be able to charge “full price” for your services again
—and on and on.
But another perspective is that discounting is a way of life today. In order to compete:
• clients are demanding that you give them a discount for whatever
• in order to bring clients through the door you have to offer them
So what is the answer when it comes to using discounts?
Many of us have an uneasy relationship with discounts. We hate them because if used indiscriminately, they can be a financially destructive force. On the other hand, if used appropriately, they are a very effective way to drive revenue and bring in more clients.
Many owners and managers use discounts too often, without giving them a lot of thought and using them far too casually. They like the short term impact on revenue but don’t understand the negative effects. At the same time, they don’t measure accurately, which is the short term benefit practice owners or managers think they’re getting from their use.
Studies have shown that offering discounts actually reduces the effectiveness of product or service that is being discounted. “You get what you pay for!” holds more than a kernel of truth.
While all of this is true, discounts can be a great way to modify behavior of our clients. We are all familiar with volume discounts. A 12-pack of flea products offers a reduced price per tablet. We are trained to expect that the more we buy the cheaper things will get. We have also come to expect that if we pay up front, we can generally receive some kind of a discount.
The same effect occurs with the bundling of services: hence the popularity of wellness plans, new puppy and kitten packages, and other programs meant to entice clients to spend on their four-legged family members. Practices or services with seasonal slumps can offer discounts to drive up business during those times of the year. The reason February is “Dental Month” is because February (in many parts of the country) is a slow time of the year. That said, when we look at what these types of seasonal promotions have done in our practices, we might want to re-evaluate if they continue to make sense in the way they are currently being used. Putting off a grade 4 dental for six months may not be in the pet’s best interest.
When Should You Discount?
First of all, it is important to have a good reason why you’re offering it. A good reason and skilled implementation can mitigate damage to your overall price integrity, reputation, and relationship with regular clients. It can also create the kind of behavior you want from your clients—opting for “yes” sooner versus later, coming in during slow times versus your hectic times, purchasing a full year’s worth of preventatives, etc.
Attracting New Clients
One of the areas that we see discounts being used most profusely is to attract new clients.
If you are going to use discounting in this arena, I suggest you design something that drives traffic.
If used correctly, you can isolate and track the damages or benefits of the discount. In this way, you can preserve full, fixed pricing for the products and services that are not used during your new client promotional campaigns or that you perpetually discount for the purpose of attracting new clients. Remember, not every dollar of revenue is created equal. Once you cover your fixed costs, a higher percent of your revenue dollars goes to profit. Getting clients to both come in and say “yes” to your recommendations is critical.
The word free is one of the most powerful words in the English language. There is no denying the fact that free can generate a lot of traffic. However, it can easily create expectations of more free services and products after that, effectively erecting barriers to ever being able to create value in the services you are providing and being paid properly for those services.
How To Use the Word “FREE”
Most of us can’t swear off free or discounts automatically, or forever. We can evolve uses of free in ways that help rather than harm our practices. We need to understand and adapt to the current market and buying conditions with which we are dealing. We have to learn to give certain things away while charging appropriately for others.
How does discounting work the best in, say for example, a general wellness practice?
What’s the bread and butter of your practice? Generally, it’s some form of annual visit. Where are you seeing the most competition? Low cost vaccine clinics. What’s the value of the annual visit? The vaccines, or your examination of the animal? I hope you answered, “the exam.” How much of the price of the visit is determined by the cost of the vaccines? Do all pets receive the same vaccines?
What happened if you priced the exam appropriately, i.e., not cheap but expensive, and threw in whatever vaccines you thought were appropriate for free? I know, I know, that isn’t how you do things.
But doesn’t this put the emphasis where it should be—on the exam?
It also precludes price shopping. How do you compare the value of your exam and client experience with the value that your competitor provides? It is critical that if you do take this approach, you absolutely, positively deliver the highest possible quality experience and unmatchable value. This can take some critical research and soul-searching on many fronts.
Free can be tricky, but it can also be your ally. In a service business, which is what veterinary medicine is, you can’t give away a “sample” of your surgery skills.
You can, however, demonstrate your expertise or value through:
• training sessions
• get-to-know-us programs
• blogs, other social media.
I am not talking about giving away so much information that you negate your client’s need to come see you. I am talking about educating your current or potential clients with the knowledge they need to understand key issues and to want to come to you. The word for this type of marketing is edu-marketing.
When done correctly, edu-marketing builds trust with your client base. It allows you to get your point across and create more informed clients/buyers. We all know and believe that an educated client is a better client. We also self-select our clients to be loyal customers and are a fit for who we want as clients.
The Choice Is Yours
As with all significant decisions, make sure you understand the benefits and risks of either choice. Do your homework and make sure you are an educated practice owner or manager when making these decisions and your hospital will benefit.