#TBT: How Not to Discount in a Panic
Happy #TBT. To celebrate, we’re sharing an oldie-but-goodie post from Jim, part two in our four-part series on how not to discount:
Don’t discount at the last minute only.
This one’s pretty simple. The second bad way to discount is to wait until the last minute, and then do it in a panic.
Why is this a bad idea? First, you’ve narrowed your options considerably. When venues come to us the day or two before a show and say they’d like to discount, we typically can’t help them, and we’re fast! But the fact is that we, like every big website, have a marketing calendar, and if you don’t leave your partners much time, they can’t do much for you. The corollary to this, of course, is that while you will have fewer choices, you will pay more for them. (To be clear, Goldstar’s not a for-pay site for venues, but in other places, you’ll pay more if it’s a rush.)
So you have fewer choices, and they’ll cost you more, but that’s just for starters. As a bonus, they’ll also be less effective because not many people make plans to go see a show the day of or the day before a show. Most people need a few days.
Now, you might say: What about the TKTS booth in NYC and similar booths elsewhere? There are some customers who make last-minute decisions like that, but most of them are tourists. If your business is predominantly about tourists, last minute is OK, if you can reach them. Normal people, though, usually need more time.
But believe it or not, that’s not it. There are more good reasons not to discount in this way.
The market value of tickets to live entertainment crashes in the days before events. It’s true, and it’s been demonstrated by several econometric studies. In other words, just before an event, the fair market price of a ticket drops like a stone. That means that if you’re discounting at the last minute, you may not even really be “discounting” at all because you’re putting the price right about where the customer feels it should be, and then there’s no incentive to buy if the person wasn’t already interested in going. Obviously, that’s a general statement, and there are a million exceptions, but as a rule, it’s right on the money.
But wait, there’s more.
If you discount late, you’re not getting the main benefit of discounting when done well, which is the promotional and awareness-building value. At least half of the value that someone gets from working with Goldstar is that we bring awareness of your show to hundreds of thousands of people, and if we don’t sell a single ticket for you, it’s still valuable promotion. You should get this promotion out there early, not late, so that it goes to work for you during as much of your run as possible. In an ideal world, the awareness-building and word-of-mouth build momentum, and as the run goes on, you need less (or no) support from discounting.
Discounting at the last minute can have the exact kind of negative impact on perceptions of your show that some marketers fear, but strangely enough, it’s the people who talk about wanting to avoid the negative perception of discounting that seem to do it this way. It’s not a winning strategy.
Let’s recap. Here’s what happens if you discount at the last minute:
• You narrow your options on promotional tools.
• You increase your costs.
• You decrease your effectiveness because people generally need more time than one or two days (except tourists and a few exceptions, like the TKTS booth hounds).
• The price of your tickets has already dropped in the marketplace as you approach the day of the show, so you’re not discounting as deeply as you think.
• You miss out on the promotional and awareness value that discounting through a good channel brings you.
• You may be doing exactly what you were trying to avoid doing to the perception of your show by not discounting before.