This reminds me of a situation about 30 years ago I was tending bar at a dinner house, it was a locals hangout and there was always a guy that would come in and comment to the owner, “you cheap bastard, I’ve been supporting you for all these years, when are you going to buy me a drink”? His response, “ya know John the owner of the place you work, I’ve been shopping at that store for 25 years and he’s never bought me a lightbulb or given me a discount on a pack of nails or nothing”. The customer didn’t ask again.
I don’t think giving him “only” 10% off will cause any damage. He’s a weasel and I’d bet he’s lower in the pecking order than all off his 15% friends and associates. If he dares tell them he only got 10%, they’ll laugh at him and it will cost him status. The 15%ers will give up shopping there because someone below them didn’t make the cut? Doubt it. Might make them appreciate their discount even more.
Since you gave him the opportunity to merit 15%, you put it in his hands to show if he’s just a small time weasel or is capable of being a regular.
In general, I agree with what’s been said about having a clear incentive policy. I’d also make sure you have a clear picture of all the costs and expenses your margins need to cover.
agree completely. I don’t mind them asking, but I also don’t mind saying that my price is fair and it stays. (I’m not in wine, but we have the same problem.)
Once I was at a busy wine store where I often dropped what I considered a lot of money, and I was with the manager discussing buying a couple cases of high end Burgundy when he told me he was going to go help another customer. I said, “Greg, but you’re helping me.” He said, “No, Alan, he spent $1 million in my store last year, so I’m helping him.” I understood.
alan
You should have introduced yourself to the other customer.
-Al
You’ve kinda answered your own question: More volume with less margin is preferable to less volume with more margin (unless all you sell is First Growth Bordeaux). Even if the customer is a jerk–maybe especially if he is–I’d guess his encounter with you will be reported negatively to his friends. If that turns out to be the story, then it might have been poor economy to refuse to give an extra 5% if it results in volume loss elsewhere.
I’d be interested to hear how the story ends–does this guy really have influence with his high-roller buddies?
Fellow 'zerkers: I can’t express how appreciative I am with the responses that have been posted on these boards. Many words of wisdom, years of experience and heart-felt responses have been made that have helped me tremendously and will surely provide positive outcome. That being said, this is what’s happened in the last couple weeks:
The small fish has come in again and spent a nominal amount. This time without the attitude and I jumped the gun on him saying he could have 10% and graciously invited him to come again. He appologised to me saying that the recent months of work have been stressful and his mood was obviously reflected in his approach towards us. Two visits within a month, and an appology?! Wow, we’re making progress.
The bigger fish have also come in, spending the same as always, asking for recomendations, help and assistance, etc. During checkout time a couple times I hinted at their normal discount and they, themselves mentioned, while pointing towards our signs prominently displayed (5% half case, 10% full case) that it was kind to offer, but questioned as to whether or not my boss would be happy with that. They took their 10% and I loaded up the SUV’s. Are they now my friends and looking out for my well-being?! What is this world coming to?!
So it seems now that smiles, cordial and professional attitude along with an overall great buying experience have left us better off than where I started when I first made the post. Thanks y’all and may many others learn from this as well. I certainly have. Cheers.
You’ve kinda answered your own question: More volume with less margin is preferable to less volume with more margin (unless all you sell is First Growth Bordeaux). Even if the customer is a jerk–maybe especially if he is–I’d guess his encounter with you will be reported negatively to his friends. If that turns out to be the story, then it might have been poor economy to refuse to give an extra 5% if it results in volume loss elsewhere.
This can be true, but you have to be careful…Be aware that the closer you get to your marginal cost, the more of a percentage of your profit/overhead contribution you are giving up.
e.g: if you make 40% on each bottle of wine. Your discount of 10% vs 15% makes your margin on each bottle 30% vs 25% That extra 5% that you’ve given up to get the sale is actually 1/6 of your 30% profit margin. So you have to sell 17% more at that lower price to have it make sense for you.
The tighter your margins, the greater each marginal percentage of discount impacts your bottom line. If your margins in each wine are 60% then the extra 5% discount means you only have to sell 10% more to have it make sense.
IMO: Everyone loves the idea of Perceived Value. Retail is X, your price is 90% of X, Etc.
You could offerl a big mac at $50, but discount it to $2.99 and if people in general thought they were getting a DEAL Compared to retail, then they would Jump For It. You could sell Montrachet at $200 all day if people thought the retail was $400. Too many people buy with their pocket book instead of their sense of taste. I think you did the right thing. When I buy groceries, I don’t ask for a Discount, or when I buy Gas, I don’t ask for a discount. Everyone has to make a buck some how. If someone comes in your business and would rather bend you over instead of allowing you to make an honest buck, then use his head to open the door.
For example:
I had a Pinot I was selling from my shop. It retails for $55. I acquired it at a great price and could offer it to my customers at $29 and still make a profit. One customer bought 3 bottles. I came across some more pinot and offered it to him at the same price. He asked me “Since this would be a total of 9 bottles, could I get a discount”. I told him they were no longer for sale and that I would sell them to someone else. If my pockets we open enough, he’d probably reach into them himself and grab the cash with his bare hands.
My point: Some people don’t have enough common courtesy to make every situation a win-win.
And yes, I’m in the business. This Rule applies to all Business though…
I was born at night, but I wasn’t born yesterday.
Just curious as to how you could be sure the customer knew how deeply the product was already discounted. I found that most people tend to assume that the shop is making an ‘acceptable’ profit on each bottle and that case discounts are ‘normal’ (or at least OK to ask for) on top of whatever the shelf price is. I completely understand your point of view on this, but my experience is that people tend not to put too much stock in the “regularly $55” thing anyway… unless they are very knowledgeable and/or know the shop extremely well.
Corrected it for you Dave hahah!
Regarding asking for a discount: “if you don’t ask…”
See, you were born to be Management.