There is a difficult balance we marketers and business owners face when creating special offers for our customers. It requires discipline and problem-solving to build programs to drive sales and awareness in the short run, without doing damage to the brand in the long run.
This week, I received a promotional email from a local day spa.
You know, massages, manicures and pedicures. In addition, it also offers a retail line of lotions and aroma therapy oils. The spa is positioned as a higher-end brand. Its pricing and build-out is higher than a quick-service spa place you'd find, for example, find at a mall location.
The email contained two offers:
- An incentive.
- A special seminar.
The incentive:
For each $100 in gift certificates you buy, you receive a $10 gift card. This is a sales driver.
The special seminar:
A "Yoga Basics" class. The spa's expert guest will teach about yoga, the benefits, and a few of the basic moves. It listed the date, time, and the cost of the class---$5 cash. Though this may have been created as a way to do something special for customers, this should really be considered a traffic-driving tactic.
The Offers Reviewed
What I've explained is pretty standard stuff. We see (and create) these type offers all the time. A special offer to drive gift certificate sales and a relevant class/program designed to help customers. But, each of these has poor consequences. Let me explain where I think the ideas have gone wrong.
$10 Offer (Sales Driver)
Get a free $10 gift card for every $100 gift card purchased.
I give them credit right off for not offering "10% Off!" Percent-off is in-your-face discounting. A "free $10 card for you when you buy a $100 for a friend" is not as blatant, however, it is still discounting.
The problem with discounting is that it reduces the perceived value of the good or service. Why would I ever pay $200 again for a massage that has been offered at $180? It is obviously worth only $180 or less. I'm now going to wait to purchase when the price is low.
Instead of offering a discount, offer a value. I mentioned they have a line of beauty products. Why not give a $10 pack of beauty products free with each gift certificate purchase?
It provides a $10 value, but what you're actually doing is driving trial. Someone (the giver or receiver) is going to try the products. What if you were able to convert them into a product buyer in addition to a service buyer? Now we have just increased the value of this customer to your company by increasing the average purchase.
Special Seminar (Traffic Driver)
Come to our class, bring five bucks. Seriously?
I mentioned this was a swanky brand. What's with "bring five bucks? I know, it the cash fee to pay the person who is giving the class. This prevents the spa from taking the money out of their petty cash. But, they're missing the point. This isn't a five-dollar-per-person cost ... It is an investment. The purpose of bringing people in, is NOT the class. It is a chance to DRIVE TRAFFIC to the site to DRIVE TRIAL of products.
The chance to offer participants a short massage, a chance to use the beauty products. This is a chance to roll out the red carpet and make them feel welcome. Show them why you're worth paying more for. Perhaps the value of coming in every four weeks instead of every six weeks.
Asking participants to pony-up five bucks make the spa sound like a cheapskate. The spa should either charge $50 a person (make it seem of high value), or make it a free seminar and use the traffic as a way to drive trial, and future purchase.
In Conclusion
As I said at the beginning, on the surface these ideas are pretty standard. And, you have to give points to the spa owner for doing something.
Something isn't always better than nothing when it can cause damage. The smart strategy not only works to achieve the short-term goals, but also supports or builds the brand in the long run.
