What does Black Friday discounting say about your service business
I’ve had a lot of emails this week advertising Black Friday deals from all sorts of companies. And while for retailers this has become the norm, in fact the ones who don’t discount stand out, what has surprised me is the number of B2B companies and service businesses that have also been advertising discounts on their services to new clients. It got me wondering how their current customers feel.
I think we all accept that you’re occasionally going to see something you paid full price for in a shop or online advertised cheaper later in the season or in an end of the season sale. And we’ve probably made the choice either to buy it at full price and enjoy it for the maximum amount of time, or we’ve decided to take the risk it will sell out, or not end up in the sale at all knowing that this means we might miss out on owning it at all.
But how would you fell if it was a service that you pay for regularly from one of your suppliers? Whether it be a monthly , quarterly or annual service. If that gets advertised as 25% off for new customers for first month, 6 months or even in one case I’ve seen this week, a year. If I had agreed a contract with that company last week (or actually at any time) I’d be feeling a little cross today. It would also make me question the value of the contract I have with them. Will the person paying 25% less get 25% less value? That’s not what the advert says (and yes we’re into a real scenario here, although fortunately I’m not their customer, one of my clients is) . I would feel that I was in effect paying a premium for a service I should be getting for a lot less money.
That’s not a good feeling for a customer to have . And in the longer term how are those feelings going to damage the relationship between the customer and the supplier? Has the supplier even recognised that they might have clients feeling this way? If they had been in touch with all their current customers and said “we’re adding x extra service onto your contract for free, for x period of time” perhaps that would go some way to compensating them. Or if they included a discount on the next invoice would again show some empathy to their customers position and provide some form of compensation. Or perhaps the offer of a month free at the end of the contract might suggest a recognition of the value of their current customers and businesses they work with. I would hope that at least they have been in touch with all their customers to touch base and get a feeling for any upset they may have caused.
Standard research says that it takes 5 times as much to gain a new client as to retain an existing one. So how much will discounting your prices have actually cost your service business?