Sadly, this is Wes’ last post; his heavy schedule and several new projects preclude him from continuing to write for Leadership Turn. Wes sends this message,  “Thank you all for visiting and reading my posts each Tuesday for the past several months.  I hope that you were challenged to think differently about leadership and business management.  My best wishes go to Miki and the entire B5 team.” I want to thank Wes for his insights on creating a leader-of-the-pack company; if they’ve proved useful to you please take a moment and say so. Finally, you can find more of Wes’ insights, as well as contact him, at the Ball Group.

Are you shooting yourself in the foot by giving away more and more in an effort to grow/maintain your business during bad times?

A proven secret to getting more [for you] is offering less [to them].

• When the San Diego Padres moved to their new stadium in 2004, they had one-third fewer seats to sell, yet they sold a million more tickets at 32% higher prices that first year.

• Subway franchisees have learned the best way to boost total sales is to reduce seating.

• Many retailers have discovered that a smaller parking lot increases store traffic.

When you want to boost demand for almost anything, just tell people that availability is limited.  Likewise, if you want more people to take you seriously and aspire to own what you sell, raise your prices.

Since all of the above are proven to work, why is it that as soon as the economy looks a little shaky, otherwise smart business owners and managers start trying to provide more for less?

There is an irrational fear that overtakes even the toughest and savviest business owners as soon as they start to project less demand ahead.

Instead of working on how to increase demand among the 85+% of those customers who still have needs on which they will spend, they focus on the 10-15% of customers who are willing to risk failure and loss rather than spend money and doing that undermines the value of their products/services to all customers.

Businesses start discounting.  They work on giving away more for less.  They make even well-heeled customers believe that their product or service is worth less.

Anyone, who has read my writing for more than a few weeks or who has seen any of the research I have conducted on what creates sustainable success, knows that I get really annoyed with marketers who needlessly give things away.

It harms them.  It harms their competitors.  It harms the category in which they sell.  And it harms the economy.

It also works to prolong economic downturns, because it not only undermines the financial well-being of many companies, but also makes customers believe that prices should stay that low, extending the pain for months longer than necessary.

Take a clue from the Padres.  If you have something worth selling, look for ways to give away less and grow your demand.

As counter-intuitive as it sounds, you will do better and gain more long-term.  You will also help the market in general.

Is your company reacting to the economy by doing more for less or less for more?

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Image credit: Ball Group