Why Discounting Is A Poor Marketing Strategy

You're listening to Podiatry Marketing, conversations on building a successful podiatry practice with Tyson Franklin and Jim McDannald.

Welcome back to Podiatry Marketing. I'm your host, Jim McDannald. Joined as always is by my trusty cohost, Tyson Franklin. Tyson, how are doing today?

I'm fantastic today. Big Jim, how are you doing?

Doing well. Doing well. Life is good in here in Eugene, Oregon. Turn sort of, you know, the fall time is is quite nice in the Northwest.

Well, you know, we're heading into our summer. So I just I love this. Well, I do I like the cooler months, but I love the warm months back in the pool, swimming, getting a bit, you know, a bit of vitamin d, few UV rays, and but not too many. You know, I wanna keep my youthful appearance.

You gotta put on some of that SPF.

Yeah. It's a shame it doesn't if you get in the sun, it doesn't make your hair dark, it would be nice.

Those days are over.

Those days are are well over. So, okay. Let's get on to today's subject, which is I'm gonna talk about discounting. And I don't know if I I came up with a fancy title for for this one or Let me give you some thought. Yeah.

Here. Okay. Here's the title for today. Why discounting is a poor marketing strategy? It's a terrible marketing strategy.

And and I know discounting, it's a personal decision, and it comes back to the type of podiatry business you want to have. But to be perfectly honest, I would not see a health care provider who use discounting as part of their marketing to attract new patients. I but they you must have not a good opinion of yourself to want to give a discount to a new patient just to get them into your business.

Yeah. It's kinda like the lowest common denominator. It's kind of a race to the bottom when you start dropping prices. Right? It's gonna have kind of multiple knockdown effects that you may not be totally ready for.

I'm sure you're gonna get into some of those today.

Yeah. Well, the part that I find funny about it, if I see somebody I haven't I haven't used before a service, and I see them discounting, I'm thinking, okay. It's great that they're discounting it. Might be a good deal. But I I I try and see it from what is your service really worth then?

If a normal consultation is worth, you know, $200 or a hundred $50, but you're prepared to do it for, yeah, $90, I'm thinking, well, is your service really only worth $90? And you're just saying it's worth a hundred and 50 or 200. And I don't know. I just think in the health care industry, you should just know, these are what our prices are. Now if you wanna do special deals or incentives for patients after they've become a new patient, I don't have a problem with that.

Especially if if someone gets a pair of orthotics, you wanna do an incentive to get a second pair. To me, that's totally different. But to use discounting just to get person into your practice, I just don't think it looks very professional.

Yeah. And you're kinda getting those kind of tire kickers and the kind of the people who want the the deepest discounts on everything. So it's gonna affect the kind of patients coming to your practice for sure.

Yeah. And I think well, can you imagine an orthopedic surgeon go, hey. Bring your knees into me. 50% off in the month of July. You'd be going, really?

50% discount on knee replacements. Fantastic. But you'd be wondering what corners is he cutting to take 50% off? I'm only gonna get half a knee replacement by getting a full knee replacement. So I don't know.

I I just think and I I like I know people do it, and but I think if it's also if you get patients coming into your clinic asking for discounts, because that's another thing. Sometimes people give discounts because people come in and ask for it. And if that's the case, I think it's a reflection on your marketing. What's the message you're putting out there if you're constantly getting people asking for a discount? Because I know in my clinic, you get the occasional person ask, but they're few and far between.

Absolutely. It sets a precedent. Right? It kinda like puts the bar at the type of patients coming come to come to the practice and kinda where their expert expectations are at.

Yeah. And especially if they're asking for a discount before they even know what your price is. They'll ring up and go, oh, do you give pensioner discounts? Do you have seniors discounts? Or, yeah, I'm unemployed, or I'm a student.

Yeah. Do you have a discount? Yeah. You haven't even told them what your fee was yet, but they already a discount. And the yeah.

So you've got your your seniors, you've your pensioners, you've got your low income earners, unemployed people, students, and also the person I class as the tight ass, the guppy, the person that just doesn't want to part with their money. And they've got plenty of it, they just don't wanna part with it. They and they they can cause more headaches than anything else.

No. Absolutely. I think, like you mentioned, they're not expecting like a premium service. They're just kinda there kinda picking apart trying to get the lowest price possible, and sometimes those people are harder to deal with than others.

Yeah. And I've got a I've got a story of a dumb podiatrist that I knew who had a had a clinic set up on the Sunshine Coast. And remember them setting the clinic up, and they got in contact with me one day, and they said, hey, Tyson. We can't pay our bills. We're actually losing money every month.

And I remember when they were setting up their clinic, I said to them, here's a list of things to do. Here's a list of things not to do. And at one point, I had to actually ask them, out of curiosity, did you get the list mixed up? Because everything I told you not to do, you've done. And everything I told you to do, you didn't do.

And they're oh, yeah. Yeah. We just thought, you know, that we'd do this. So they thought they knew better. Then when I had to look at their patients and what they were charging, I went through all their patients with them, and it was something like 90% of their patients were getting some form of discount.

They were being bulk billed, there was a discount. Only about 10% were actually paying full price for for a visit. So I went through everything. I said, I've already worked out that if you stopped doing all that, it's gonna add an extra $1,015,000 dollars a month to your bottom line. And I went, oh, seriously?

I went, yeah, seriously. And I went through it all because they were they were pretty busy clinic. They did that. They listened to me for three months. And for three months, their figures went up by about 10 or 15,000, and then they stopped.

They they slowly went back about six months later back into their old habits until eventually they just shut up shop and walked away. Overnight, they pretty much just closed the clinic and and shot through, did a runner. And and the reason I know this because it cost them about

The portion.

Over $220 they spent setting the clinic up. So I knew they'd done a runner, so I rang the receivers and said, hey. I'll buy I'll buy the clinic for $30.

Oh, really?

And they went I said, because you're not gonna get it you're not gonna get your money back trying to sell those equipment anywhere. You're not gonna you can't sell the fit out. I said, I'll take over the whole clinic for $30. And they went, yeah. Okay.

So I went in there. I bought it. And I tell you, jeez, it was hard work building it back up because they had run things so poorly. But probably at six months, we got it back up to being a profitable business again. And but yeah.

And that and that's and that's what happens. This is what people don't realize that when you get into that discount mentality and you do it once, if you can do it for the initial visit, then you'll they'll expect it on subsequent visits, and they'll expect it on other things. But then they'll tell all the discount minded friends, hey. You should go see these people because they don't charge full price. And it just it just spirals out of control.

Yeah. That's not good. Right? Like, it's just gonna be downhill from there once once you kinda, like you don't you don't get the revenue kinda coming to the practice. It just has massive trickle down effects on not only attracting the wrong patients, but then if you can't pay the bills and, you know, keep the lights on, then it's a totally different situation.

Yeah. And that that's the part I think and this is why people need to know the numbers and and how it actually affects you by long. So an example I have, if if you have a consultation, let's say, hundred dollars, and say it costs out of the hundred dollars, it costs $70 to actually run your clinic. You might have staff wages and overheads, electricity, fixed and variable cost cost $70 to run it. So you get to keep $30.30 dollars of it.

So it's 30%. That's not too bad. A patient might say, oh, can I just have it? I just want a 10% discount. That's all I want.

Just a 10% discount, you you you lousy mongrel. Give me 10%. And you go, okay. So you take $10 off. And now your revenue for that consultation is only $90.

And they're thinking, yeah, you've only lost $10. But it still costs $70 to run the clinic for for yeah. Over that period of time, which leaves you $20. But so a 10% discount to the patient realistically is a 33% discount to you as the owner. So every time patients are saying to you, hey.

Can you give me a 10% discount? Just realize it's a 33% discount that you're losing in your pay if you do that for for enough people. And if you're turning over a lot of meat, that's a lot of money that you're letting go for for what reason.

Yeah. Like you said, you really have to know the numbers. You have to know how it impacts your revenue, not just the the price that the patient is paying, but now what you're receiving in revenue is huge. So, yeah, I think that's a it's a great point.

Yeah. I remember these old couple who used to see my husband and wife, and they were they were journalists, and they'll be dead now so I can talk about them. And they I don't think they listen to the podcast. So anyway, they they were journalists. They had made really good money their whole life, But they were now living in, like, this government funded retirement place, which pretty much in this, like, little shack amongst all these other little shacks.

I think they said now, think they've torn it down. And it was a bit of an eyesore. But I remember them coming in to see me, and they both come in at the same time. They go, oh, come on, Tyson. Can you give us a discount?

We both come in at the same time. And I went, no. And they said, why why won't you give us a discount? Can you give us a if you can't give us a good reason why you can't give us a discount. I said, well, it's really simple.

I said, you're both journalists? They were, yes. Did you both work for one of the main newspapers in Australia? Yeah. Traveled the world, seen everything?

They were, yeah. So piss your money against the wall like this. Yeah. You didn't have any kids. I said, you didn't have to put anyone didn't have to educate anyone.

You put them through university. You've used all that money. You've both earned really good money, and you pissed it against the wall for forty or fifty years. And now you expect me to give you a discount because you pissed your money against the wall. And if I do that and I do that for enough people, I don't wanna have to go to my podiatrist in the future and harass him about getting a discount.

He says, I refuse to give you one. And he just went, fair enough. So they kept coming back. They still they still came in. I just said no, told them why, and I may have been a bit politer to them when I said it.

But in my head, this was what I was telling myself. They lived a really good life. They had great incomes. They traveled the world. They got a million experiences, and they pissed the money against the wall.

And I'm thinking, so it shouldn't be my responsibility now to have to look after you or take money out away from my family because you decided to have a good time twenty years ago. Yeah. I wanna have a good time in twenty years, so so I need the money.

No. Absolutely. I mean, it's I guess one way to look at it too is if they're both journalists, maybe they work for the same publication. Did they give the publication a good deal because both their you know, the publication is paying both of their salaries or both of their you know, I know it doesn't always work like that. Sometimes people are freelance and stuff, but but, yeah, it's like, you know, would you take a discount if you both work at the same publication?

Absolutely not. Right? They wanna get paid full wages just like you wanna get paid a full wage.

Yeah. And especially, like, I've had receptionists come up and go, oh, come on. Yeah. I think you should give Martha and Mabel a discount when they come in. They're regular.

They're pensioners. You know, they're doing it really tough. And I'm thinking, yeah, when they're not at the pokies. You know, the one the one armed bandits, sick of beer at the casino. I've seen them there.

I know what they're like. But but I'd say the reception, okay, that's fine. Well, when they come in, I'll give them a discount. If if you're prepared to instead of pay me paying you $30 an hour, you only take $20 an hour while they're here. Sure.

Receptionist never put their hand up and go, oh, yeah. Yeah. I want I want my wages dropped as well when they're here. And then because they don't realize that every $10 you don't accept from the patient because you just go, oh, no. I'll give you a discount.

It's $10 that should be in your bank account. It's $10 that is going towards your your family and your lifestyle and your future and your retirement. It it all adds up. And I know people that are you know, like, I'm 58 now, and I'm extremely comfortable with where I am financially because I chose to set my clinic up a certain way, charge accordingly, not give out discounts, except I would do deals for patients. Once they became a a reliable trusted patient, I would do other things for them.

But initially, I just don't think it's a good it's a good plan.

No. Totally agree.

And I know podiatrists that are my age who yeah. I'm almost at the front of their clinic with a little tin cup rattling it, trying to get people to put coins in it. And when and when I look at those people, I and I remember their clinics and I remember what they used to look like, and I remember their marketing used to all be about discounts and bulk billing and doing all that. And I looked at them twenty, thirty years ahead, and I've gone, they're gonna be asking for discounts themselves in the future because they they just haven't I think sometimes when if you get in that discount mentality, it it sort of I don't know. It, like, transfers onto you and your your whole life becomes like this like, discounted.

You don't you don't enjoy life. Instead of enjoying life, you you enjoy a discounted version of it.

You're clipping coupons and you're asking everybody else for a discount.

Yeah. And people will be listening to this talk to just thinking, Tyson, you you're just mean. But I think if you if you listen to me talk about this and you're thinking I'm just mean and nasty, then then I'm mean and nasty. But I'm sure there's other people listening to this. I'm sure there's other people listening to this.

They go, yeah. No. You're right. I shouldn't be giving discounts. Or maybe I'm maybe I'm not saying don't do it.

If you want to do it for someone I'd give my mom a discount. I'm not hard. I'm not that I'm not heartless. Right. In fact, I wouldn't charge my mom.

See, that's how much of a nice guy I am.

You're a fantastic guy.

Yeah. And if I, like, if I had close friends and I had friends that I've known for years in Cairns, and they come to me and say, hey, Tys, can you do this? If I knew there weren't a health fund and it wasn't I I said, just just pay me what it's gonna cost me to do this plus a bottle of rum. So we would I I would do things like that for people. So it wasn't that you were totally harmless.

It's just a complete stranger in the street coming to me wanting a discount. I go, I don't know you. How do I know that you're not loaded or you're about to come from my clinic and go to the casino, which I had seen people do? He said that they didn't have any money. The last point I wanna make on this is don't get into price wars with discounting podiatrists.

So if another person moves into your area or you might set up in the area, and when you set up, all of sudden you hear about the podiatrist down the road and they've dropped their prices because they wanna be the cheapest podiatrist in town. I'm thinking, let them. Because I always say someone's gonna be the most expensive, it may as well be you. And don't you set up a clinic somewhere and drop your prices just to try and get patients. Because if everybody gets on that that spiral down of of dropping the prices to try and attract patients and what is it quite this all year?

Getting a price war with an idiot results in two idiots. So it's just crazy. And then I think it was in the eighties in Australia, they had the beer wars. Did you have beer wars in America or Canada?

I don't remember hearing about that. No.

The beer wars. There was there was a in Queensland, was like the main company was Forex. But then all these other beer companies from other states started coming into Queensland. But then became these beer wars where everyone was just dropping their prices to try and capture the market. And but the only person that won in the end was the consumer.

The people consuming the beer were absolutely loving it. Prices just just came down that much. And even to this day, when when I see the price of a carton of beer and they and a lot of them are still discounting at different times, I think the consumer is still winning it. And then they could double the price of beer and people will still consume it. They're not gonna get, oh, am I gonna pay a hundred dollars for a carton of beer?

Yep. Australians will.

I'd probably say that, like, you know, if the podiatrist get into this kind of competition, I think the the patients actually don't benefit because what happens is that you just spend less time, get to see more patients in order to kinda make your

Yeah.

Make ends meet. So while while the price might be great for the for the for the patient, they might like to have it, you know, a discounted price. They're not gonna appreciate that discounted service, or don't expect a discounted quality of service or level of service. Right? So but, you know, in order to know, most podiatry clinics these days are businesses.

Right? So you have to make ends meet, and that you gotta generate revenue somehow are gonna shut down.

Yeah. I think that that is a spectacular point to finish on too because it is. You you can't keep dropping your prices without it affecting how the rest of your business is run. And if you've got certain overheads, you've got a lifestyle that you've become accustomed to and you wanna maintain that, you have to cut corners somewhere. So you could yeah.

It could be the time you spend with the patient. It could be the quality of equipment or materials that you're buying. Are you gonna buy something cheaper because you know it'll save you money? So I I don't think there's any real benefits that that come from it.

Totally agree.

Okay, big Jim. That is me done done and dusted for discounting. I think everyone would agree now. I've listened to this. If you have been discounting, they will not be doing it anymore.

Or if they do,

Time to go cold turkey.

Cold turkey. Just yeah. That's it. Just rip the band aid off. Stop discounting and just charge everybody full price.

And a few bit guys go, they'll be they'll be losing sleep. They'll sweat.

So sounds good, Tyson.

Okay, Jim. I will talk to you next week.

Alright. Bye now.

Okay. Bye.

Thanks for listening to Podiatry Marketing with Tyson Franklin and Jim McDaniel. Subscribe and learn more at PodiatryMarketing. That's the website address, podiatry.marketing.