The Benefits of Premiums and Upgrades

Alas, the tactic of choice for the marketing-impaired is usually discounting. Using discounting to sell is like eating sugar. It gives you a blast of energy (sales) and then you get the blues. Why? Because your customers start to question the value of your services. You train them to wait for a discount. And you have less cash coming in.

Let's look at a simple alternative that's healthier. Premiums and upgrades are the agave syrup of spa marketing. No cheap sugar high here, upgrades do two wonderful things.

Benefit #1: if you offer an upgrade rather than a discount, you keep the cash flowing at the same level. Instead of discounting that $100 massage by 20% and receiving $20 less, you still get your $100. Yes, there's a hard cost to most premiums, but if you're playing this right, it might be 30% of its value. If you give an upgrade from a standard to a deep tissue massage, for example, your cost is the difference in what you pay the therapist.

Benefit #2: you often introduce the guest to a premium service, which creates better results, higher customer satisfaction, and higher retention. Not to mention the fact that discounting doesn't create gratitude, let alone loyalty. (Studies prove this.) Discounting just trains your clients to expect more discounts, and commoditizes--rather than differentiates--what you're selling.

We're all for using creative tactics to manage yield. But please resist the temptation to drop the "D" bomb. The sales you kill may be your own!

By Peggy Wynne Borgman, CEO Wynne Business