The following is from the December 2008 Drilling Down Newsletter.
Got a question about Customer Measurement, Management, Valuation, Retention, Loyalty, Defection? Go ahead and send it to me here. If on the topic below, please leave a comment.
A Budget for Discounts?
Q: For the first time ever, we have a Discount budget built into our financial plan. We’ve been told this number in the budget is less than we used last year, but our Sales target is a bit higher. We’re supposed to hit our sales targets while at the same time not going over budget with our Discounts to generate those sales. This directive comes from Finance.
A: You have just been offered the opportunity to graduate from Advertising to Marketing!
Q: We are fairly sure if we reduce the discounts we give, response is going to fall and so are sales, especially from best customers. Or we could keep the same discounts but do fewer discount promotions, with probably the same effect on sales. Are there any other alternatives, any ideas on how to manage this discount budget issue?
We’re an online only retailer.
A: Sure, ask an easy one over the holidays!
Seriously, I hope you did not take my comment about graduating from Advertising to Marketing the wrong way. This is really an opportunity for you to shine in so many ways, and to learn a lot of new ideas in the process – if you want to take advantage of it.