Food & Beverage - How to Make Discounts Work For You, Not Against - By Ken Burgin
A hotel's discount offer caught my attention: 'Book now and get a voucher to the value of 5% of your party spend.'
Clever? Maybe, but a few thoughts come to mind:
- Can people actually 'do the sums'? Do they know this means that, for a $700 function, they get a $35 voucher to spend at the bar? Many people find percentages hard to work out. Would the offer of a bonus $50 Voucher be more effective, or less?
- Is this discount enough to shift behaviour - does it convert 'not interested' into 'what a great deal, let's abandon our usual place and book here'?
- Is it giving a discount to people who were happy to pay full price anyway?
At least it didn't look as desperate as many of these offers do...
Fact: most discount deals are treated with cynicism.10% off the price of tyres, a free glass of wine with meals on Monday, spend more than $50 and have a chance to win a holiday...zzzzzz.
Discounts now need to be thumpingly good to make an impact, which means you've probably given away your profit margin!
When it may be worth giving a discount:
- As part of a smart 'meal deal' or function package that wraps items together for a 'special price' that works for everyone.
- When the customer pays cash or bank cheque for a large booking andnotcredit card.
- For giving youalltheir business (eg corporate entertaining) instead of just some of it.
- When an event reaches a certain size.
- For paying a large deposit or paying for an entire event well in advance.
- To fill an empty room at the last minute. But remember, for ever after that is 'the price' to that group of customers.
- For bookings on a less-popular day or month. But try not to use the Dword - remove the room charge, upgrade the beverage package or add cocktails in the bar afterwards - maintain your dignity (the other D word).
Profitable Hospitality offers management and cost-control systems (Manuals & CD-ROMs) for restaurants, cafes, hotels, bars and clubs. The systems are based on the extensive consulting and operating experience of CEO Ken Burgin, and enable busy owners and managers to set up complete operating and cost-control systems in minutes, not months. Profitable Hospitality also runs regular management training workshops in the areas of kitchen profit & efficiency, restaurant marketing and functions management. A free monthly e-newsletter keeps you up to date on the latest industry management issues. www.profitablehospitality.com.
