In this week’s blog we look at one marketing tool to avoid.
Avoid offering general discounts to repeat customers
This may seem like a strange thing to say and probably goes against a lot of people’s views on marketing for repeat customers, but in our experience discounting is probably the least effective marketing tool you could use for creating repeat business.
Offering discounts can actually hurt your profits for the following reasons;
– Discounting makes customers perceive a lower value. Once they have received a discount, they are less likely to perceive full price as a good value. Once your customer receives a discount they’re likely to expect it with every visit. If they don’t get it, they may well walk. Your discount has just lost the very thing you were trying to gain; repeat customers.
– Frequent customers already like your restaurant, and they are likely to come back and pay full price anyway. By offering them discounts, you are practically throwing money away. You do not want to give freebies to customers who would otherwise pay full price for the product.
– Unless you are a value-oriented business, where price drives visits, loyal customers will usually return to your restaurant because of the food and service, not just because of the price. Therefore, it is better to give them incentives that involve extra food or better service.
Discounts are just numbers that are only appreciated by customers on a cognitive level.
Better incentives – like a free cocktail, attractive merchandise or a simple first-name greeting – appeal to customers on an emotional level, too.
So think carefully before you start offering discounts to customers. The relationship between yourself and your customer is built on the confidence your customers feel in your food, and the assurance they get from buying what they know to be quality.
No matter which marketing tactics you choose, make sure that the reward will delight your customers.
In general, the reward should be something they associate with pleasure. Emotionally stimulating rewards will create a stronger emotional commitment in your customers.
Once customers feel an emotional bond with your restaurant, they will provide you with both increased sales and free word-of-mouth marketing.