If you own a small business, you’ve probably heard of Groupon. Basically, they offer small businesses the opportunity to expand their reach by deeply discounting their services. Many businesses have jumped on board in the hopes of expanding their customer base.
As a result, many field service businesses choose to offer discounts to generate more business. But is the Groupon deep discount model a good idea for maintenance packages?
While I truly believe that you should want customers who choose your field service business based off of quality of work done, that is not always the case you are presented with. In this day and age, customers are looking for the best deal and sadly they may go with the lower quality, “cheaper” company. So the question remains: Do you sacrifice some of the profit for potentially more jobs?
The answer is no. Discounts on packages are not a smart business move and here is why:
Less Profit (in most cases)
Offering discounts that will be low enough to “compete” with your competitors’ prices can be very detrimental to your business. While you are offering a lower price for the job, you are probably still using the same amount of resources and technicians needed to complete the job. Unless you are charging enough that the discount does not actually cut into your profit and growth (which I highly doubt because you are trying to lower your prices to compete with competitors), it seems unlikely that you will be able to afford everything you need to do a job well. This leads us to the next problem with offering discounts…
Lowered Customer Satisfaction
By offering these discounts, you will have to cut costs somewhere. While your guys will still provide the same respect and care with customers and their property, they may not have the best tools to do a great job. Your techs can only do so much with the tools you provide them with, but if you offer discounts, you are cutting into the resources you have to purchase the best quality equipment and materials.
Lowering the Perceived Quality of Your Company
When you go to the store, do you choose the lowest priced products? Or do you choose the products that you trust and can rely on, regardless of price? By lowering your prices to attract more customers, you are making the statement that you are not worth the extra costs. By being a landscape management owner or a lawn care business owner, you should take pride in the services you provide, and the work your technicians do. While you may not get the numbers you would if you offer discounted prices, you will receive quality customers who will stick with you in the long run due to your time, commitment, and excellent work done at their property.
The only time using discounts on packages is okay in my book is when you are trying to get a customer to upgrade to a higher package. This in turn will lead to more revenue as long as the discount isn’t anything too extreme. Otherwise discounts lower the quality of your work and can lead to a lot of one time customers, instead of the more coveted repeat customers. The point is to make sure that these discounts do not hurt the business, but rather help it. Otherwise, let your work show your value and let your competitors take the “cheap-asses”.