When a business person makes decisions or takes action without thinking things through, they harm business. Here are various risks to business owners that are associated with offering deep discounts. You are likely to attract price hoppers. Most people prefer price hoping rather than creating loyalty with a specific retailer or shop. When you use sites such as Groupon to offer deals including $5 kohls cash, you are likely to attract more price sensitive customers because Groupon often look for deals. This is the reason why the conversion rates for the long-term shoppers is low.
Offering a bad deal for the business is another risk associated with offering deep discounts. Most business persons do not calculate the total cost of operating a business before they settle a deal. Under the pressure of opening and running a business, you are likely to overlook some of the hidden costs because you are in a rush and also lose money on the deal you are making.
Updating pricing expectations unknowingly is another risk. When most people get a good deal, they set the price as a scale. When the very same shopper pays more another day, there will be the feeling of dissatisfaction because the same customer paid a different amount in the past. A businessperson should understand the risks involved before giving deeply discounted offers to the customers. It will help him or her make the best decision in what kind of offers to give.