Could small businesses benefit by offering discounts?
Small firms across the UK could potentially be missing out on improved sales as they are unprepared to offer discounts, according to a new study.
Vouchercloud suggests that businesses that offer discounts on some products will usually recoup the finance from increased sales elsewhere.
Start-ups that began offering discounts after two years of trading were questioned as part of the survey, and nearly two-thirds wished they had offered money off deals sooner.
Customers are drawn in by discounts and special offers according to the study, which highlights the importance of attracting a consumer onto a website or into a physical store to spend.
Retailers and service providers could see three-figure increases in sales every month should they opt to use discounts and vouchers.
Such an approach also helps to attract new customers –74% of small business owners revealed this was the main reason for using discounts.
Slightly more than six in ten added that they needed to meet sales targets while 58% said they wished to reward customers by offering special deals.
Others saw discounts as a way of increasing brand awareness and of promoting new products, factors identified by around half, and a third, of business owners respectively.
Although offering discounts may initially be viewed as cutting potential income as costs are lower, a longer-term picture is required.
Bringing in repeat business and therefore increased sales can quickly make the initial loss worthwhile, while discounts also provide a fantastic way of improving customer relations.
Businesses must be careful in their early years however, as cost effective pricing is needed to avoid overall losses.
For instance, should sales of a discount item not work as planned then a business could lose out financially – if this occurs on a widespread scale then the firm may then be under severe financial pressure.
Careful price management and keeping a watchful eye on finances are essential to avoiding the need for business restructuring, although this solution can help to make underperforming businesses more efficient.
Lowering margins could therefore be an approach that is worth considering for any firm looking to increase sales – it just needs to be done responsibly.
By Phil Smith
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