I have always believed that you get what you pay for, and you get what you deserve.
If you go with an agressive discount policy to poach clients, they are the type of clients that you deserve, clients that are not loyal, do not value the service they given (assuming they were originally happy with the service at the place they are deserting) and will leave you as easily as you lured them in.
They are also the type of clients that will cancel at the last minute, no shows, expect freebies.
We are in a recession and most people have less disposable income but by the cost of supplying your services has not gone down, up if anything! So by reducing your prices are you admitting that you were overpriced before?
It is so hard at the moment, in all lines of business and when it comes to sink or swim you have to do what is necessary.
If it helps, over Christmas I heard on the radio a local nail salon doing a groupon deal, it has cost them regular clients.
I'd agree with you Sammi if you're discounting across the board, but not with targeted discounting to introduce new services/products to your clients.
Think about it in a different sector ... let's say Warburtons produce a new loaf that is offering X, Y and Z health benefits, but retails at £1.60. They might introduce the line at 1/2 price introductory offer to allow you the chance to try it. When it goes back up in price, will you immediately run back to "Tesco Value White Bread" for 35p?
Targeted offers don't always attract 'coupon clippers' unless you go through a site like Groupon.
I can think of one very big "discounting" mistake I spotted last night when I was picking up a takeaway as an example. I noticed that the menu in my favourite takeaway had changed and when I looked at it (let me go grab it...one sec), it says "Exclusive Discount 10% off on all orders at all times at feedmeonline.co.uk".
Now obviously, a rep for this website has called the owner of my favourite takeaway and probably said something like this: "We can bring you loads of new customers on our website. People will order online and we'll send you their order. It will cost £xx to get you registered on our site, but to make you stand out from the other takeaways in your area, you really should offer a discount or something. And for each customer order we send, we'll charge you 50p for the new business".
That's how I imagine it went. And he fell for it.
So now, he is telling all of his existing customers that they can knock 10% off the price of their meal by registering with this website (which is like a food version of Groupon I guess) and ordering through them. He hasn't realised that rather than getting new business, he is simply pointing his existing customers to a place where at best they will pay him 10% less than they used to (plus the website fee comes off the price of the meal too) and at worst, they might spot another takeaway on there with a better offer and decide to try them out instead - something they would not have done if he didn't direct us to the website in the first place. How stupid is that?
In our industry, it's akin to doing a Groupon on a set of acrylics or a wash,cut and blow and then telling all your clients about it.
Now what if, when I walked in last night, he had added a new "super burger" to the menu that was totally different to anything on offer either in his store or anywhere else locally? Say he priced it £7? Now that's a lot of money for a burger, but what if he told me I could try it for £4 including free chips as a taster? I would probably have bought it. And if it was delicious enough, I would treat myself to that £7 burger now and again. If I couldn't afford it, I would buy his regular burger, but it would always be a choice between his regular burger and the expensive one, depending on my finances. What it certainly wouldn't be a case of is me running off to Mcdonalds for a 99p burger as soon as his offer ended.
See what I mean?