One of the most interesting office signs I have come across had these words: “Customer is KING. KING never asks for discounts.” I found those words a nice way of telling one’s customers to not be cheap. It is the business’ way of telling its customers not to request reductions in the prices of products or services.

But the truth is that discounts matter, for both businesses and customers. For as long as people have traded, customers have always asked for reductions in prices. It is just human nature. People would normally want to spend less than what the seller asks for. This is why discounts are such a big deal.

In the ultra-competitive era we find ourselves in, businesses do not even wait for customers to request discounts. Many businesses resort to the use of discounts as a way of enticing customers to purchase the product.

The normal plan is that the discount is supposed to be for an initial period and thereafter, the original price of the product will kick in. It has been argued, by some, that this does not often happen since many customers are not ready to pay the original full price when the discount period ends.

It has also been argued that when businesses offer discounts, it is possible that the customers who initially flocked to buy the product or enjoy might not love the product. It is just the sense of getting something almost for free that motivates these initial customers. These first customers would be the first to walk away when the discount period ends.

It has also been stated that discounting can also give the impression that the product is not very good which is why the business is almost offering it to customers at a reduced price. There are even those who say that when a business constantly offers discounts, the brand of the business becomes diluted. All in all, those who are against businesses offering discounts argue that discounts negatively affect the profit of the business.Business opportunities

Although these instances seek to show that discounts could be detrimental to the fortunes of a business, discounts are still a very important arsenal in the promotional mix of many businesses. There are organisations whose entire business models are essentially based on discounting.

Retail outlets that sell products at prices lower than those asked by traditional retail outlets are, in fact, referred to as Discount Stores. This is enough proof that many businesses see the many advantages to be obtained from resorting to discounting.

An article published in the June 2020 edition of the Journal of Service Research sought to find the effects of customer discounts on frontline employees and the results were quite interesting. The article was titled “Do Customer Discounts Affect Frontline Employees?” If the findings of this particular study are anything to go by, then it seems businesses must take a critical look at the whole idea of discounting before embarking on it as a market entry or promotional strategy.

While acknowledging the importance of discounting to achieve the corporate objectives of many organisations, the study argued that discounting may have “additional unanticipated effects” on employees who might be involved in the whole process. The study focused on the potential effects of discounts on frontline employees.

It has always been known that employees act as a secondary audience to any marketing and advertising messages that organisations send out. In other words, employees truly act as internal customers—as they also tend to consume the messages sent by the organisations just as the external customers do.

In this regard, it has been found that as organisations target their customers with discounts, the message is not only received by the external customer but also by the internal customer. Interestingly, the study found that giving discounts to customers resulted in a reduction in the appreciation employees felt at work.

What many people fail to recognise is that the price of a good or service gives an indication of the value not just the good or service but also gives a certain value to the seller. For instance, picture two individuals who work in the same industry for two different firms, one with more expensive products and services than the other.

Now, it is not farfetched to see why the individual working with the more expensive organisation will have a higher value of the one’s self. Therefore, assuming the organisation decides to reduce the value of the products via customer discounts. This reduction will hit the one’s perceived value of his or her work.

Also, in the minds of employees, they did all the hard work and made all the sacrifices for the organisation. It therefore seems unfair that the organisation would rather decide to show appreciation to others, in this case, customers. Because decisions regarding customer discounts are taken at the management level or even sometimes at the board level, frontline employees can easily see it as an unfair top-down decision.

The reaction of employees, i.e. internal customers to the discounts given to external customers is not too different from the reaction of the brother who stayed at home when his wayward brother, aka, the Prodigal Son, returned home.

Just as the one who stayed at home expressed, he had been faithful to the father all these years and had not been given even a goat to prepare for his friends. This is exactly how frontline employees when they see customers “enjoying” while they are not being given the same treatment.

When employees feel that they are not being appreciated, their responses can sometimes have devastating effects on, among other things, their attitude towards work. This eventually results in a decrease in the level of the employee’s motivation and subsequently a lowered work performance of the said employee. The ultimate result will be that customer service and customer experience will suffer.

The aforementioned study even added that an indirect consequence of employees not feeling appreciated as a result of a customer discount might be an increase in the turnover intentions of the employee. In other words, an organisation that tends to use customer discounts as a means of attracting customers could end up losing its internal customers.

Due to the undesirable effects that customer discounts can elicit, businesses must do serious consultations before embarking on customer discounts. It would help if lots of explanations were given to employees, especially those who will be responsible for helping customers redeem their discounts.

It should not be taken for granted that frontline employees would be mature and professional enough to understand why the organisation is giving discounts to customers. Frontline employees must be brought into the decision-making process for customer discounts and be made to own the process.

Open communication and honest dialogue should be encouraged between Management and frontline employees. That is one way by which frontline employees would better handle the emotions that come with seeing customers “enjoying” discounts.

Another way by which negative emotions are attached to customer discounts is by the use of modern technology. If customers can be made to enjoy their discounts remotely, without blatantly displaying their “goodies” in front of frontline employees, the negative feelings of those at the front line would be minimised.

If customers can enjoy discounts via online channels, and have their purchases dispatched to them, it would reduce the need to come face-to-face with customer service employees who might not be pleased.

It would not be practical to say organisations should scrap the use of customer discounts as a promotional tool. There are still some important benefits that can be obtained from discounts. The important thing is to ensure that in giving discounts to customers, employees are not made to feel left out. If the feelings of those who deal with customers are discounted, it will affect the experience of those receiving the discounts.