Reversing Your Discount Theory

Most people approach discounts as a way to fill distressed space.  But the masters of discounting take a completely reversed approach to the way they price their products and services.

I remember working in a hotel and they got a new marketing manager who promptly went down to the front desk and stopped the receptionists selling unbooked rooms on the night at a cheap price.  Her logic was - people who haven't booked in advance - they don't have a room booked - they are in pain because all they want is a room - now is the time they will pull out their credit card and pay top dollar because they don't want to phone up or walk to the next hotel to see what is on offer.

Now yes, some people will shop around, but generally if someone is in pain and they want their pain fixed there and then - they will pay whatever it takes to get a result.

I learned a lot about marketing in my other life as a hotel financial controller, because this type of logic showed up directly in the profit line of the hotel's books. 

The airlines and hotels are the masters of  discounting - watch what they do and try to mimic them with the way they sell.  They all discount well in advance - not last minute.

Discounting at the time of consumption is K-Mart territory.

Charging full price at the time of consumption is the domain of hotels and airlines.

As therapists we want to be like the latter not the former.

Its not widely known outside the industry but Hotels and Airlines start to discount a room or seat around 18 months out at events like ATO (Australian Tourism Exchange).  All the tourism brokers from around the world come in and bid on blocks of rooms.  They get the rooms at rock bottom prices but only have access to those rates for a negotiated period of time.  Anything not sold by then, well the hotels take those rooms back and up goes the price.

That's why the tourism industry can do those knock down deals that encourage you to book and buy early.

Then once the hotel knows how many rooms they have left from that discounting exercise, they will put the price up and start either trying to advertise the rooms themselves or they will try to sell them off to other buyers.

All the while the prices go up.

Then closer to the consumption date (the day the room gets used) they offer what's left out on discount sites like Wotif.

Then have you noticed how hard it is to get a deal close to the day of consumption.

If you walk up to an airline counter and want to fly NOW - the price of that ticket will be astronomical, because they know you need to fly that day and that you have few choices at that time .... so they hang out to sell that ticket at a high price.  It also messes with their admin if they have to change the loading of the plane, so guess who pays for the cost of that admin - yep you guessed right - the late booker.

This is the model therapists could consider adopting.  Fill early at discount and fill last minute at a high price.

This is why packages work so well - people buy their session up front and you can then manage any space left over spaces weeks out.

But those packages need to be discounted off what hotels call your "rack rate".  "Rack" is rarely charged to anyone, except if they are trying to book on the day of consumption.  "Rack" is rarely charged but it is always there.

Your price funnel needs to reflect that "rack rate system".

So your top end price will be really high - no one really expects to pay it, but there is always a chance someone will be desperate enough to pay it.  Then your package rates are what you DO expect people to pay.  Then you have another rate, which is the discounted rate, which only gets given out if you haven't sold the top two rates.  That would be what's called "back filling" - dates and times you always struggle to fill.

Wotif is a great example of last minute discounts - I LOVE Wotif but I also know if I want a specific hotel and room type on a specific date - then I better book up front with the hotel and pay the price.

Build on Expertise NOT on Price


The aim of any therapist should be to be building as fast as they can toward being seen as the "go to person" for their particular area.

If people perceive you are head and shoulders above your competition and you are seen by them to be "the best", they will pay more and expect to wait to see you.

It's a delicate balance in the early days between filling those empty diary spaces by opimising your cash flow AND building a high end practice.  But when you start discounting too much, people start to see you like K-Mart - cheap, hi availability and open all hours.  Won't take you long to figure out that will wear you out personally.  
The ideal is hi end, hi demand, hi attendence in the limited spaces your treatment room is open.  That way you are in optimum health and giving 120% to your clients and are not worn out trying to make a dollar seeing heaps of people each week.

In order to push prices higher further down the track, you can't be out discounting every week - and if you do, you need a reason to discount - one airline has Friday Fare Frenzy and its is totally random.  You will notice they RARELY discount their hi end business class seats in these types of offers, they are "back filling" cattle class and keeping the hi end part of their business in tact.

I'd recomend you create a "cattle class" type of treatment for the discounted spots - I say that with love of course, I'm not encouraging you to treat your people like airlines treat their customers - but do have a clear definition between a full fare treatment and a discounted treatment.  That way when your diary is full, you simply pull the discounted treatment off the menu and all those full fare high paying, high tipping, fabulous "A" type clients don't even notice anything has changed.

"C" type clients will always just find someone else - "A" type clients stay loyal and will often book the same spot each week or month and are happy to pay for the privilege of having the same regular time slot.

I want you to have a highly abundant practice full of clients who know and love you and are willing and able to pay your fees, treat you with respect and keep coming back.

Some Different Ways to Discount

There are many different ways to discount your services without cheapening your brand.

If you want to fill some empty spaces in your diary fast, a lot of therapists are posting what I would call "cheap and dirty" offer on discount websites.

In fact it seems to be all the rage right now.  This site is a broker for the discounters www.allthedeals.com.au and will give you a list of all the different sites that allow you to advertise.

Indeed it is just another great way to pull new people into your practice.  It's most certainly a spray and pray tactic in that you spray out the message to a vast number of people, praying that it hits your ideal client.  Spray and pray tactics give you little control.

Its also a PUSH tactic meaning you have to push into a crowd to get a result.  My system much prefers PULL tactics where you build relationships that pull people toward you.

A pull tactic is much easier because eventually it surrounds you with people who know and love you and they want to love you more.

Push tactics often solve short term problems and fill gaps in your diary, but they may not sustain the business well, because you haven't qualified the people yourself.

A pull tactic means just by being you, you have drawn people to you via your opinions and by your ability to show your expertise in a particular area.  This takes longer and so a pull strategy is a long term way to get clients, but it a sure fire way to ensure you end up with a practice full of clients who love everything about you.

The difference is subtle but a pull tactic requires a bit of time to build the relationship, but once people who have experienced you a few times are ready to work with you, they require very little conversion because they have already decided that they know and love you.

These people may have been sitting as prospects on your newsletter list or have been following your blog, or they met you at a speaking engagement and became a facebook friend.  In these instances you have given them a taste of what you are all about before they phone you and they feel as if they know you.  If you build any sort of relationship with a prospect, the chances of them booking something with you, goes up the more they relate with you.

So internet advertising (that isn't targeted) is a lot like a virtual letter box drop - you are marketing to total strangers who have no idea who you are.  The pluses are that it doesn't cost a lot to get to a heap of people, but your advert may not bring huge results because the people looking at your offers, won't know you and may not be the type of people who want and need your services.  But if you only want to sell a couple of spots each week in this discounted category, then its another way for you to get the message out.

However, you need to consider if you are cheapening your brand.  

You also need to remember your current clients, paying top dollar may find these sites and wonder why you are overcharging them.  So as always discern if a service like this is right for you.

Using the discounters will potentially bring a lot of tire kickers, people who consume the cheap massage and then never return - that is a big risk in these types of offer.  But if you have your rebooking patter down, and encourage them to book again before they leave after the first treatment - then you have a potential loyal customer in your midst.  It's the strength of your re-booking patter that will determine the long term value in advertising on discount websites.

I believe you have to be careful about discounts - you can end up sounding like K-Mart if you are constantly discounting, and people just end up wanting to pay less and less for your services.

I'd consider other ways you can discount, without just slashing prices.

Maybe consider a discount club, where your current people may pay say $20 a year or month to join - up to you to decide the fee.  But the joining fee would get them access to your "last minute club" for a year.  The difference being that the available spaces in the club spots may be a bit random and they don't get to have regular times with you.  That way you are only offering discounts to certain "last minute" types who like to book last minute.  This type of strategy allows you to fill what is known as "distressed space" - someone has cancelled an appointment or you just have a gap in the diary.  The other plus is that you get back some of the discount back via the membership fee.

You could also consider a "come on short notice" deal for specific types of people - small business owners like me who have control of their own schedule or hospitality workers who have the whole day to themselves or are finishing work at weird times.  These types of people could come in your downtimes.  All you have to do is email or text them with your downtime specials and they can jump in and grab them. 

Its about getting creative with your discounts and making sure you don't end up with a bargain basement style practice.

Getting Good Habits Right From The Start - Further Thought on Discounting

I'd recommend you don't discount to people who you have already "trained" to pay your normal fees.

Its going backwards when you do that - however I would encourage discounting to get people through the door to experience you.

Getting more clients is easy if you are meeting and introducing people to your practice in a meaningful way.

Each time people have the opportunity to meet and relate with you - the more chance you have of them becoming a client.

Its why in the early days my system recommends 2-4-1 sessions.  For a new therapist (and sometimes the not so new therapist) it is pretty scared to ask for business in the early days so offering 2-4-1 sessions gets you in the habit of re-booking a client.

How You See Yourself Is How The World Sees You

 

If you think cheap - the rest of your world will think cheap too.

What goes on in your head is the biggest key to your success.  If you get your thoughts right at a very early stage of your business growth, that is what will manifest for you in the future. 

Offering 2-4-1 sessions sets in your mind that people are going to come back to see you.  This may sound too simplistic but I have found, if you set good habits into the complex pathways of your brain in the early stages of anything - you create a good habit that never needs to be adjusted.

If you don't get in the habit of having people return to your practice time and time again - you are going to have an uphill battle filling that practice.

If you start constantly discounting in the early days you set the thought in your head that people will only come if the price is cheap enough. 

In fact, price has very little to do with why people will book a treatment - but if YOU think that's the reason why they come .... of course that WILL be the reason whey they come.

The Pro's and Con's of Discounting Treatments

I'm often asked if discounting treatments is a good way to build a practice.

Like everything involved in running a small business, there are pro's and con's to everything.

Lets start with the logic of discounting.

Before you rush out and send out a discount voucher to current clients (people you have already trained to pay your full price), maybe consider what you are building first.

I encourage people to get the foundations right in their business first, then build on top of it.

So if you are considering discounting, you need to go back to your Decide Dream Believe statements and look at what you were dreaming of creating in the first place.

Are You Samey or Are you Different?

You need to ask yourself how you are going to position yourself in the marketplace.

Do I want to build a K-Mart type operation or do I want to build something more boutique like and specialised.


So many therapists think that if the price is cheap enough, then people will book a treatment with them.  However, there is much more to why people book a treatment than the price.

If you want a K-Mart type solution, you are setting yourself up to work long hours and people will expect the cheapest prices from you.  They will also expect that discounted price as they consume the purchase - so they expect to walk in at all hours, get what they need and pay a cheap price for it.  Not exactly a great recipe for success in a small service based industry.

However, with a more boutique style operation, the owners encourage a more specialised and attentive service, you need to book early and you can expect to pay for that higher level of service.  Bed and Breakfast type operations are a good example of this.  They often have fewer rooms for sale, but you pay more for them and you get more personalised attention, like the owner greeting you and a personally cooked breakfast.  In a cheaper hotel chain situation, you will be presented with a bain marie full of eggs cooked hours ago and some crispy fat soaked bacon which was also usually cooked by the least qualified cook in the kitchen, because its the easiest meal to prepare on that mass level.

So your very first step in considering discounting for your practice is to consider - are you offering a fully personalised service that offers a lot of personalised attention and deserves to be well rewarded, or are you just happy to churn people through quickly at a lower rate.

On a "personalised and different" level, you need to see less people at a higher rate, and at the "samey" end of the business you need to see more people to meet your financial targets.

I find most people have never even considered the "Dream" aspect of their practice, so you might like to go to my Easy Solutions for YOUR Success website and download the Two Hours of Complimentary Audio and a Workbook on this topic.

If you don't have the basic foundations discussed in this workbook and a clear understanding of what you are trying to create in place, you will simply be chasing your tail trying to lure people in with K-Mart style offers each week.  Once you differentiate on price, you will be constantly competing to have the lowest price in your marketplace.  That gets tiring and expensive because it requires a massive advertising budget to keep the masses aware of your constantly downward spiralling prices.

You end up with an un-abundant practice, simply because people who buy at discount generally shop around and do not stay loyal.  If you go the K-Mart route, you will be constantly trying to rope new people in to cover the ones who are buzzing off to the person around the corner undercutting you by $5.

You will have figured I prefer the hi end, hi price, hi service end of the market, simply because that is the recipe for a fully abundant practice.

But its up to you how you go about setting up your practice, but please get the plan set out first, then go and decide how you discount your services.