Why is discounting the wrong strategy for spas? Because it reduces the cash flow you receive while simultaneously undermining the perceived value of your services. Spas sell an intangible--we're not retailing automobiles, dishwashers or home furnishings. We're not even selling transportation, as airlines do. We sell an experience. This experience is purely elective. No one goes hungry, or loses their job, because they don't go to a spa. That means luxury spas must jealously guard the perception of value.
A big change in perception occurs when you discount an intangible. It calls into question the real value of the experience. It reinforces the fear that the customer may already harbor: is this really worth it? Should I really be paying $120 for an hour massage?
And frankly, that's not why I really hate discounting.
I hate discounting because it's so...pedestrian. Marketing should be sexy. And discounts aren't sexy. Discounts elicit a sort of primitive, knee-jerk response from customers.
Mmm. Discount. Good. Give discount.
Discounting doesn't accomplish our goals as marketers. A discount can result in a burst of cash, but a hangover inevitably follows. When we create an incentive, we want our customers to think that our spas are even more brilliant and desirable than before. Discounts don't do this.
By Peggy Wynne Borgman, CEO Wynne Business www.wynnebusiness.com