Are New Clients and Referrals worth Discounts?
In the age of Groupon and Value Menus it can be hard to resist the temptation; Should I run discounts to get people in the door? However, this can be a sticky situation. Let me share a story:
When I first started as a therapist I was an independent contractor in a multi-therapist office. As ICs we could run our own specials separate from one another. One therapist in our office was a real hustler, she wanted bodies on the table and she wanted them now. She started offering real steep discounts (we were pretty low priced for the market anyway) and she would call up her clients every Monday trying to fill the spots she still had open for the week with this last minute discount.
She did this every week.
Flash forward a few months and one of her regulars comes in to buy a gift card through the office. I’m available and handle the sale. When I tell her the price she balks, ‘That’s not what it costs for an hour!’ the client then proceeded to refuse the gift card saying ‘she’ll call with a discount, I’ll just wait for that’.
I wish I was lying. This poor woman had hustled her way to working for close to half of what the rest of us were charging. True, she tended to run about 25 hours a week, but I made significantly more doing my 16-20. She was never booked out in advance because her clients had been taught to wait for her to call around on Monday with the super savings.
On the other hand, I’ve heard therapists rave about having more clients than they could handle come in through websites like Groupon and turn a bunch of them into regular clients. So what gives?
Start with Why
Before you discount, ask yourself, Why am I discounting? Are you slow and need to pay bills, are you just launching and need your starting clientele, or maybe you’ve just taken an awesome CE but none of your clients are signing up for the new service? Depending on Why you want to discount will determine a lot about whether or not you actually end up discounting, and if you do, what kind of discount will you run.
How do I get clients for my new practice?
If you’ve just launched your new business and the locals aren’t exactly banging down your door, it’s tempting to throw a coupon up on Facebook or in the local paper. However, do you really want to undercut yourself straight out of the gate? Perhaps you should re-evaluate your marketing strategy (did you have one for your pre-launch?)
First off, you may want to take a hard look at your niche and ask yourself a few questions:
Is my niche specific enough and fitting to the area I’m in?
Does my marketing copy speak to my niche audience?
Have I contacted referral sources relevant to my niche audience?
If you live in a retirement community and you’re marketing to millenials, you may have a problem. Additionally, if you’re marketing to retirees and all of your images are of young active people talking about injuries related to fitness or sports, your message may not be resonating. And finally, have you gotten your marketing message in front of people who can refer you large numbers of your target market?
If you haven’t done these things you may want to try some more free/low cost promotional efforts before you start throwing around discounts. For example, you could write letters of introduction to some of the doctors or chiropractors in your area. Chronic pain in general is a big reason a lot of people go to their general practitioner, and the medical community is being pushed hard to stop using opiates and pain meds for chronic pain. Make sure you are specific with who you serve (your niche) and are professional. Remember it’s the doctor’s reputation that’s on the line when they refer out, if they think you are going to undermine their recommendations or generally be unprofessional they will not refer to you.
Should I discount my new service?
If you have a new service and no one’s biting, it’s actually not a bad idea to run a very exclusive discount for said service. The goal here is to get more business for a service you think is fabulous, but people are iffy about trying. Since people trust reviews almost as much as they trust a referral from a friend, getting a few of your star customers to try your new service and give you a testimonial can give you the edge to make future sales.
The trick here is pretty simple: Hand select clients you think would benefit the most from the service and give them a ridiculous discount. Make it so good they’d feel stupid for saying no. Maybe that’s 25% or 50% off, maybe it’s upgrading the length of the session by a half hour. Whatever it takes to make them bite, that’s what we’re going for.
Now, contact them via phone, email, or at their next visit if they’re frequent visitors and tell them about the service, how you think it would be great for them, and how you want to give them an exclusive discount so long as they’re willing to give you an honest testimonial afterward.
Next, put together a form to collect the testimonial, have it ready so they can fill it out before they leave. And for heavens sake, make sure you put 110% into that appointment, don’t skimp in any way. With a few testimonials to put on your website, in your office, and on social media you should see more bookings. Not to mention those original clients will hopefully continue to book the service themselves.
I’m short on cash and need clients now!
Now the tricky one, I’ve got bills to pay and not enough clients on the books.We’ve all been there. It’s the slow season, or your computer broke, or you had an unexpected doctor’s visit, or you weren’t prepared for tax season. Whatever the reason, you need money, and you need it now!
Ideally, we’re saving up for a rainy day fund and are prepared for these things. However, in the real world that’s not always what happens (maybe something already used up the savings account and you get hit again). In this case, whether or not you discount is very specific to your situation and how you do it.
If you need money and don’t have the clients, it may still be a bad idea to discount. When we discount, we always run the risk of devaluing our services and if we discount frequently we teach coupon clippers that they can expect to get a bargain.
Also, just because you give someone a discount doesn’t mean they’re going to come in immediately. I mean, how many gift-card holders wait the full year to come in? That massage cost them nothing! If you give someone a discount and they don’t come in until you’re through the squeeze, now you’re just loaded down with cheap massages.
So if it’s your slow season evaluate the immediacy of your need and see if a bit of non-discounted outreach can get some of your clients back in. Even just calling clients you haven’t seen in a while to check up on their condition can net you some bookings. Frequently people have been meaning to schedule and life just keeps getting in the way.
However, if you’re still new and don’t have a file cabinet of old clients to call, you may need to run a discount to get that quick infusion.
How to run discounts that work
As mentioned earlier, your discounts should help you and not just your client. Discounts should do one of a few things:
- Promote a specific service or product
- Attract new clients
- Recapture old clients
- Make money now
To accomplish this our wording for the discount or coupon needs to be very specific and include a time range for its use. If you’re trying to make a very quick infusion of cash and sell discounted gift cards, you can make the cash value maintain value but the discounted value runs out after a set time.
Ex. Someone buys a gift card worth $100 and gets it for $60. The $100 value may be good for 2 months but they could still apply the $60 value toward a future service after the deadline.
I personally, do not like selling gift cards to make quick cash. If you use the money now it leaves you doing “free” massages later.
If you want new clients, make sure you specify in your discount that it is for new clients only. Otherwise your regulars will show up getting cheap massages when they have no problem paying full price. I mean hey, who doesn’t like a good deal?
Usually, if you’re discounting old clients to get them back in, it’s also falling under the ‘I need money now’ category. So the caveat here is to make sure you put a short deadline on the deal. It’s no problem to run a flash sale and only give people a 1 or 2 week span to use the special.
One of the ways I like to get new and immediate clients goes as follows:
I coordinate with a local, high volume retailer that is relevant to my target market (establishing a relationship with them ahead of time helps this run smoother) and offer chair massage for free in their store. I have an informational table set up and donations jar for a local charity (usually Humane Society). Now the hook, the goal is to get people in fast. So I create a special where 20% of all massages for the next 2 weeks will be donated to the same charity. This way, the service is not devalued, but the client gets to feel like them getting a massage is an act of charity. People like to feel good about themselves. If someone shows interest in massage (whether or not they get a chair massage) I inform them of the charity drive and give them a flyer. Let them know this is for all massages and if they could help you promote it you’d really appreciate it. This allows you to promote to not only the people you see that day, but potentially everyone they know as well. Run this way, the promo costs you nothing but that 20% for a two week span, the clients you bring in will be okay with your price point because they’ve already paid it, and you get additional promotional material when you share how much you raised for charity.
But should I discount for referrals?
Referrals are one area I don’t mind discounting, initially. I’m getting solid leads from people who are already like me and it allows their recommendation to get faster results. When I first started my own practice every business card had the following on the backside:
I love meeting new people!
_____________________________ (write current client’s name here)
Thinks I could help you with a massage.
Bring in this card to receive your first hour
for the price of 30 minutes!
This way I could tuck the redeemed card into the current client’s file and send them a thank you note (people like hand written paper mail over emails) for the referral. I also kept a few with my name on them so if I met people in public or at networking events I could keep track of my own effectiveness. These days I’m not using this discount because I already have a steady clientele and I don’t mind if the turnover process for new clients takes a little longer.
More recently, I ran a Christmas special through my clients. I selected my top 20 clients and mailed them a letter at the beginning of December with 3 special coupons. The general message was ‘Christmas season is always hectic. Shopping for coworkers and friends can be hard. Let me take some of that strain off of you with a few perfect gifts for Secret Santa or stocking stuffers.’ Included with the letter were 3 gift cards. They were each worth a 30-minute relaxation session and could only be redeemed by new clients.
They also had a deadline of March 31st. The first few months of the year were usually slow for me and this was a very cheap way to get an influx of new clients without overloading my schedule during busy times. It also guaranteed I was getting solid referrals because these were people in the inner circle of my clients. Good clients tend to spend time with other people who will make good clients; ‘birds of a feather’ and all that.
At the end of the day I’m not fond of discounts and I use them very infrequently. Discounts are frequently used to put out fires and in business we should focus on preventing problems, not resolving them as they come up. However, if you find yourself needing to discount remember:
Discounts should drive customers to perform an action you want them to do.
- This action should be specific, and occur within a specific time.
- If you’re going to discount, then do it right: it should be significant enough to create action. If no one bites you just seem cheap.
What are you’re thoughts? Have you had success with a discount and held on to those clients or maybe been burned in the discount battle? Tell us about it below!