Princess Kelelo Dhlamini Skade
HAVE you ever seen an old lady trying to sell something to survive, a widow trying to sell fruits for fees, a jobless man trying to do some repair work for a few wages to put food on the table?
Well, we all have!
How many times have we tried to just get an unnecessary discount just because we just all feel like “we deserve it, or worse, the goods or services don’t deserve the price, or actually, as an unconscious act of bullying the other person!
Today let us talk about over negotiating discounts and how that can have severe repercussions on small businesses, ultimately threatening their very existence.
When customers push for excessive price reductions, it can lead to reduced revenue, making it challenging for the business to stay afloat and maintain its market presence.
For instance, a small clothing store may offer a 20% discount to a customer, only to find that the customer returns with a competitor’s offer of 30% off, forcing the store to reconsider its pricing strategy.
Small businesses often operate on very small financial margins, and excessive discounting can quickly erode these margins, leaving the business vulnerable to financial instability.
This can lead to a downward spiral where the business is forced to reduce prices further to remain competitive, ultimately leading to a loss of market share and revenue.
For example, a small restaurant may offer discounts to attract more customers, but if the discounts are too deep, the restaurant may struggle to maintain profitability.
This also includes the art of freebies, when it’s a relatives small businesses leading to conflicts in time.
Excessive discounting can also damage the business’s reputation and relationships with suppliers, creating a ripple effect that can have long-term consequences.
When a business consistently offers deep discounts, it can create the perception that its products or services are of low value, leading to a loss of customer loyalty and retention.
For instance, a small electronics store may offer discounts on its products, but if the discounts are too frequent or too deep, customers may begin to question the quality of the products.
Excessive discounting can lead to a lack of investment in the business, stifling its growth and development.
Businesses must prioritize building strong relationships with their customers, based on trust, value, and mutual respect.
This can involve offering loyalty programs, rewards, and incentives that encourage customers to remain loyal and committed to the business.
For example, a small coffee shop may offer a loyalty program that rewards customers with a free drink after a certain number of purchases.
Businesses must also prioritize innovation and differentiation, focusing on creating unique products and services that offer real value to customers.
This can involve investing in research and development, staying ahead of the curve in terms of technology and trends, and continually seeking feedback from customers.
For instance, a small tech startup may invest in research and development to create a new product that meets a specific customer need.
In order to avoid excessive discounting, businesses need to develop a clear pricing strategy that takes into account their costs, target market, and competition.
They also need to invest in sales training to ensure that they are equipped to negotiate effectively and maintain healthy financial margins.
For example, a small business may develop a pricing strategy that offers tiered pricing, with different levels of service or product quality at different price points.
The consequences of excessive discounting can be severe, for this act has been used even on smaller markets like on street vendors, they are forced to spend the day on dangerous roads to make a living, yet end up bullied into discounts that are sometimes below the amount used to purchase the selling items.
It is all our responsibility to take proactive steps to avoid this trap.
Effective strategies and sales training are also essential in avoiding excessive discounting.
Businesses must continually monitor their pricing and sales strategies to ensure that they are aligned with their overall business goals.
For instance, a small business may regularly review its pricing strategy to ensure that it is competitive and aligned with customer needs.
We should be prioritizing innovation, differentiation, and strong customer relationships, businesses can maintain healthy financial margins and achieve long-term success or sustainability.
We can avoid the pitfalls of excessive discounting on others by having compassion towards small businesses, struggling vendors and people.
Working for minimum wages.
Sometimes that small money requested is all they need for survival
