We Didn’t Make A Dime Sale
Imagine if your web-store had a yearly “Thank-You” sale for your top 200 customers. The Thank-You sale is a sale where you only charge the cost of production (sourcing) plus shipping, in short, you don’t make a dime. Do you think this is a bad idea? If so, why?
Perhaps if this strategy was opened up to everyone, this would result in some valuable sales. If you’re in the business of selling items, but you aren’t making a margin then you need to be gaining something else. That being said, this could be a great way to grow the email/newsletter list, or to convert customers from other stores…which might also grow the lifetime value of your customer.
Also, I think this transparency could backfire once they see the item’s actual cost. Consumers don’t understand the need to fund operations/overhead, etc. when it’s their money being spent. Give them a dramatic deal, but don’t show them your cost.Reply
“Give them a dramatic deal, but don’t show them your cost.” You are exactly right. The sale will just remove our ‘net’ profit margins. Besides, this will be a limited time and limited item sale so risk exposure is controlled. To execute such a sale the retailer must know their customer lifetime value. At the end of the sale the retailer will see how many new customers were generated and multiply that with lifetime value. The computed number must exceed cost of sale.Reply
Hey Mike: You are exactly right, showing costs is a sticky catch 22. The question is how do you convince the customer this is a ‘dramatic’ deal?Reply