6 sales pitfalls to avoid this festive season

Mistakes may be inevitable, but many of them can be avoided.

As the festive period properly sets in, what precautions have you taken as an entrepreneur to avoid the pitfalls the season brings with it?

Here are six common errors businesses make around the Christmas and New Year’s season.

1. Giving uncalculated discounts

Many households will be strapped for cash throughout the year, but when Christmas rolls around, they’ll find a way to squeeze out a little something to gift the family. It’s a season for family and fun, shopping and dining out.

As an entrepreneur, you’re going to want to cash in on this extra spending.

It’s tempting to try to keep up with name brands and bigger establishments who’ll be offering deep discounts, waivers on delivery fees and so on.

While giving discounts is a brilliant way of attracting customers and making more sales, you can’t afford to do it without thinking through what it means to your business.

Spending dips in January, so don’t risk taking a few losses in December because recovering your position will take quite a while.

Instead, consider discounting some of your products, rather than all of them. And focus on the things that market your brand and display your strengths.

Also, you may want to think about rewarding repeat customers with special deals rather than trying to appeal to the ad hoc shopper who may never return – and has a long list of suitors anyway.

2. Not giving discounts

You might be tempted to think that going against the wave and being unique is the way to stand out from the crowd.

But during the Christmas season, few people are likely to view this as being unique; it’ll more likely be interpreted as being stingy. Especially if your competitors are running special discounts.

While you do need to make sound business decisions, find a way to make holiday sales hurt you the least.

You can decide to take a small haircut on your profits as a sign of goodwill towards your customers. Or reward high-value purchases on products you want to move before the new year begins. Play along with the season; forget being unique.

3. Underselling to woo customers

This is a mistake that many entrepreneurs, especially new ones, fall prey to.

December is a great time to launch a new business, particularly one that appeals to the masses. In an attempt to draw foot traffic to your store, you may lower prices to basement levels to woo customers away from your more established competition. Don’t do it.

The biggest danger with this strategy is that it isn’t sustainable. The Christmas and New Year festivities last about a month and a half at best.

Lowering your prices may draw in the customers temporarily, but when you inevitably have to raise pricing, you’ll lose them. Particularly if they didn’t find any other value to your business aside from low prices.

Always keep your costs front and centre of your mind when pricing your products or services during the festive period.

And make it clear to customers that the lower pricing is a limited offer or valid only while stocks last.

4. Overpricing

This mistake is often caused by greed. Some entrepreneurs look to take advantage of the influx of shoppers this season to increase pricing.

While this is a good time to make more profits, don’t overdo things or try to take advantage of your customers. They’ll see right through you.

Set your prices at an optimum level that takes into account your costs of production, competitor pricing and the profit gradient.

You would rather make a steady profit over time than a one-off chunk that ends up servicing future losses.

5. Compromising on quality

Festivities come with their share of challenges, and there may be the temptation to compromise on the quality of your goods and services to sell more.

However, don’t destroy a business you’ve built all year to satisfy passing demand. Be prepared for the season and stock up early so you’re not scrambling last minute and being forced to take whatever’s available.

6. Overstocking

Don’t fall into the trap of anticipatory stocking, where you buy too much stock anticipating high demand.

While it is important to be prepared, don’t overdo it. Do your math correctly and study previous years so you don’t end up with dead stock that will affect your cash flow, especially when January rolls in.

hustle@standardmedia.co.ke