As a first time entrepreneur, you sure have your own insecurities and doubts on success or failure of your business. These insecurities often lead to making marketing blunders that can cost dearly to your business, often leading to heavy losses and early closure. Obviously you do not want to start on a wrong foot, do you?
Offering discounts is one of such marketing mistakes that start-ups end up doing. Wondering why? Here are some experiences I had while starting up and lessons that I learned.
Customers come for your product not discount:
If you have made an awesome product or service, customers are looking at your product, not its price. Price does has a significant role in consumers’ purchasing decision making process, however, pricing research is something you should do before announcing the product in market.
Once out there, you have stick to decisions of pricing to see who are the customers ending up really buying your product. They are your ideal customers.
You will be answering many window shoppers who would like to pass their time with negotiations and bargaining on pricing and discount. If you have been waiting for your FIRST CUSTOMER for a long time, chances are you will break down at some point and give out the product at much less than what you quoted. This is one decision that will trouble you for a long time in your business. It did to me.
I offered straight 50% discount to my first customer thinking at least I will have made my first sale. But followed was a bunch of follow up customers who were ready to buy out at the offered price for their pure love towards the product. That’s what I call Ideal Customers. So better wait until its dawn than giving up so easily.
Irrespective of discount, customer will spend all their budget:
Surprising isn’t it? Have you ever noticed when you go for shopping, you have a budget in your mind?
For example: I am going to spend Rs 5000/- on XYZ items. Now, when you find discounted items @20%, have you ever come back with the balance Rs 1000/- ? It is a rare phenomenon. If you are getting 20% discount, most probably you will be buying more stuff with remaining 1000 rupees and feel so excited that you got more out of your budget.
So do your customers. If a product is too good to resist, people spend their planned budget completely. Therefore, feel free to quote a price that is justified to your product. However, if you want to delight your customer, add more value to your product through bundling. Bundle some services or complimentary products that can delight your customer. For example: Buy sunglasses and get a lens cleaner free.
Remember: There is a difference in discounts and best price offer
Your customer will spend their complete budget anyway; your skill is to make sure they spend their entire budget on you. How do you do that?
A strategy that Coca-Cola used when it slid behind Pepsi: Consumers spent their money on drinking water, Coke’s team made sure that whatever their consumers spend on drinking water, they spent on buying a Coke. Hope that sounds cool!
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Often we meet people in different start-up forums who look like a Monk who thinks he knows everything, like many start-up entrepreneurs. But the fun begins when you ask them about their great idea and they say “I cannot disclose it”, even though when you think you can help them. Well, they are damn right if they are about to launch the next big thing and they are pretty sure about it. However, does it work that way always? I say no. There is this common question that goes like this, “should I discuss my idea outside? What if it gets copied?”
As it can be quite a co-incidence that there is more genius and success hungry person waiting to work on your idea or even out-do it, the chances are very less.
The right question to ask however is – who to discuss the idea with?
Imagine you are working on your “great idea” and you invested your blood and sweat for almost a year to bring it in to the shape. It is about time you launch it when you realise that it fell short of market’s expectations and you wish you had taken enough feedback throughout the development process.
No one cares about your idea unless you have something to prove it. As it is said, “seeing is believing”. It is therefore better to drop all prejudices and start approaching people for their feedback on your idea. Here are some tips to get what you want from people yet keep your idea safe while you are out talking to people about your idea:
Create a target profile for your audience:
Who do you think you should be talking about your idea? Potential investors, industry experts, advisors, friends, colleagues, potential customers and others who can directly or indirectly be affected by your idea could be the right audience.
Once you understand your audience, it will be easy for you to decide what to discuss and how much to discuss depending on the audience.
Ask different set of questions to different people:
Your customer will not be thinking like your potential investor. For your customer, it will be the value customer can get for his/her money from your product. While for investor, things will be much more complicated.
For your customer: Talk about their needs and potential benefits your idea can bring, get their buy in for that.
For your investor: Talk about the bigger picture, potential impact in the market place and scale you can achieve with your idea. Talk about your team and your previous relevant experience.
For advisors and experts: Talk about potential flaws in idea, gaps in industry, more applications of your idea and its scalability.
You will know who you should not talk to:
If you are really conscious about your idea, especially when you bump into a potential competition, it might be a good idea to create a generalist pitch around your idea, saving the specifics. For example if you are making gaming platform for niche subject targeting young students between age of 10-15. You may want to just state that you are a gaming company and generalize further discussions. But it important that you throw enough keywords to keep the conversation going, for you may learn something new that can help you – or get a new perspective to your idea.
In special cases, you will come to understand that it is pointless to discuss anything. May be you can ask how did they like the coffee
Overall, the objective is the keep the ideas and feedback flowing, it will only help you identify potential short-comings of your idea that you may missed for some reasons.
Do share your experience while sharing your ideas with different people.