Stop Discounting Premium Products

Premium product discounting usually occurs when a lift in sales is needed during a specific period of time. Companies sacrifice margin in order to appeal to a larger audience with the hope of a sudden and predictable surge in revenue.  These discounts vary from a percentage off the list price to a flat dollar amount reduction.

Generally speaking, discounting a high-end product can result in an immediate increase in demand.  That said, marketing professionals continue to profess that the more people pay, the more value they credit to their purchase. However, when premium products are discounted, consumers question the value of the product.  In addition, the value of a powerful brand is the ability to demand, and consistently obtain higher prices than competitors in the marketplace.  Discounting also conditions the consumer to delay their purchase and wait for the impending sale. 

A viable alternative to price discounting continues to be the utilization of a prepaid card (plastic or virtual) to create the motivation for the targeted consumer to purchase immediately.

The benefits of prepaid are as follows:

• Immediate program revenue lift – prepaid stimulates demand and improves margin

Predictable program financials with an ability to maximize revenue recognition

• Return of incremental customer monies – prepaid allows for a unique opportunity for seamless cross-selling and up-selling ancillary products

• Continuous engagement of end customer through card messaging (IVR, Text, Email and Web)

• Ability to gain consent from the consumer in order to continue to interact with them moving into the future

• Reinforcement of brand with ability to customize the card and corresponding collateral

• Detailed spend data that helps create a more accurate profile of the end customer

Historically, rebates were utilized to stimulate revenue, with the underlying hope that the consumer would avoid the involved process of submitting their rebate and the rebate dollars would return to the sponsor company.  That is not the objective any longer.  The real value the rebate provides is in the ability to immediately engage the consumer with the end goal of creating a loyal, persistent relationship.  In the case of a consumer rebate, prepaid becomes a valuable financial instrument that provides an organization the ability to ensure their buyer becomes a viable, long-term asset.

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