Are you upsetting your best customers?

Have you ever been tempted to lower your prices to win new customers? Go on, be honest, you have haven’t you?

And why not? It’s a popular tactic.

Here’s how it’s, um, meant to work. Customers sign up with your business because of the low price. They fall in love with your product/service. You pop the price up after the honeymoon period. And they carry on buying from you because you have proved how fabulous your product/service is.



The first problem is that the very people who sign up to you on the basis of low price are completely disloyal. They’ll be off to the next business to drop its prices before you can say boo.

The next problem is that your new customers won’t suck up a price increase. You’ve anchored them into a price point and that’s right where they’ll want to stay.

So what’s the third problem?

Well, while you run the risk of losing the new customers before you’ve made any money, it’s the least of your worries. Because problem three is that you’re upsetting your existing customers.

Oh yes. Wait until your loyal customers find out there’s a deal on.

At the very least they’ll be irritated that they are paying more for their stuff than the new folk.

But worse, they are likely to think that they are overpaying. They figure that if you can afford to offer the product/service at a discount then they are paying too much.

And no one wants to feel like they’re being ripped off, do they?

Oh no.

So if you’re lucky your existing customers will tell you they feel aggrieved and you will get a chance to sweeten them up with a discount.

But if you’re not so lucky your wonderfully loyal customers will go and look for someone else who will appreciate them more.

So what’s the alternative?

If you want to do something to woo new customers, pick an offer that’s irrelevant to existing customers. Don’t make it price related, but rather make it a gift of something extra, like free delivery, installation or training. Something that is genuinely useful to the new customer but completely immaterial to the existing one.

Julia Bickerstaff’s expertise is in helping businesses grow profitably. She runs two businesses: Butterfly Coaching, a small advisory firm with a unique approach to assisting SMEs with profitable growth; and The Business Bakery, which helps kitchen table tycoons build their best businesses. Julia is the author of “How to Bake a Business”  and was previously a partner at Deloitte. She is a chartered accountant and has a degree in economics from The London School of Economics (London University).



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