We always tell our health and wellness clients that the pressure to discount vanishes when customers truly believe that you make their lives better.
When is discounting unavoidable? When folks see your business as interchangeable, as indistinguishable from your competitors.
If your potential customer thinks you look and act just like your competitor in every other respect, you’re forcing your customer to make a buying decision based on – price. After all, that’s the only difference THEY can see.
And that’s why it’s so important that your marketing clearly communicate how your wellness business makes lives better.
Consider these examples from the restaurant industry:
The US recession began around 2007. The restaurant industry as a whole has seen same-store sales drop 2% to 5%. Only recently have they recovered, and in the time in between, there was a lot of carnage.
Yet during that same time, Panera Bread’s reported record revenue and profit growth. And they didn’t discount.
Why? They haven’t followed the kneejerk responses of their competitors.
Everyone else cut costs – and service and quality suffered. Tables sit longer with dirty dishes. Food comes out slower and colder because kitchen staff’s been trimmed. Bathrooms stay messy. And so on.
Panera continued to hire people and buy quality ingredients, underscoring their reputation for extra-tasty sandwiches, salads and sweets served fast.
So all they really had to do was stay the course, no faltering, and they looked better than ever compared to their competition.
In fact, they went farther and actually upgraded some of their products during the recession, which put them even farther ahead of the competition. (The lettuce at Panera? These days, it’s the same lettuce that luxury Four Seasons hotels serve. And their salad sales are now up 30%.)
You know who else has had great revenue growth despite the downturn? Without discounting?
Why? Chipotle attracts customers who value organic and/or natural, freshly prepared food that’s quickly made to order – so they’re willing to pay a premium for it.
And Chipotle, like Panera, protected what sets it apart despite the recession.
Despite the economy, McDonald’s same-store sales have far outpaced the rest of the restaurant industry. How did they do it?
Primarily, by adding premium menu items like Angus burgers that attracted customers trading down, and by diversifying their products to include stuff like coffee and smoothies that bring in more and different customers, at new times of the day.
While food costs are up across the board, none of these stores has been quick to pass those costs along to the customers. Strong customer loyalty + smart management has given them the financial wiggle-room to hold off on price increases while the economy settled down a bit. Only now are they starting to adjust menu prices to reflect higher food costs.