Last weekend I went shopping for a Mother’s Day gift for my girlfriend with her 6 year old son. My intention was to get in and out in under 5 minutes. That didn’t happen. It was about 10 minutes! I would have been out sooner except I had to find my girlfriend’s son hiding under a table listening to Kanye West on my iPhone! So cute!
As I was rushing out the door the saleslady asked me if I wanted a store credit. That stopped me in my tracks. Why? Who doesn’t love getting a deal? Right?
Check out the store’s discount strategy. They give you store credit for 10% of your current purchase that you can use on your next visit, but it expires in 30 days. Clever! They hand write the amount of money on the coupon and for some reason it just seems more real. How could I throw away $8.73 worth of store credit? I stuck it in my wallet just in case. In the back of my mind I knew I only had 30 days to use it.
Why does this type of deal work for me, the customer?
1) The more I spend today, the greater the store credit I have for next month. So I feel like I am saving even though I am spending money again. Who doesn’t try to justify and rationalize spending money on shopping? Is it just me? I wonder how many people actually go back and use the credit…
2) By writing in a specific dollar amount of the credit, I know exactly how much money I will be saving on my next visit. I don’t have to do any math. It’s simple.
3) For a new customer like me, it makes it easy for me when I don’t know where to go when I need to buy a gift. We men shoppers need direction!
Why does this type of deal work for the store? And what can you learn from this as a business owner?
1) It encourages their customers to come back for more. You need to keep your customers for as long as possible. The longer they are with you, the more money you could make, the more valuable your business is, and the easier it is to manage your cash flow. The more your client spends the more the lifetime value of your customer is. Why not have clients that are worth tons of dough?
2) They aren’t discounting the customer’s initial purchase. They are charging full price and only giving a discount on the next purchase which needs to happen within 30 days. 90% of something is greater than 100% of nothing!
3) Who doesn’t love getting a deal? And don’t we all love bragging about it to our friends? Word of mouth can be one of the best ways to attract new clients.
Just got an invitation to my best friend’s daughter’s birthday party. I need to buy her a gift. Where am I going to go? Right back to the same store to use my $8.73 store credit.
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