customer abuse

On my way to an appointment the other day, I saw this sign in front of a business. My first thought was noticing that someone put a fair amount of time and talent (compared to what I could do with a chalkboard) to draw the anchor, write the message, and outline each of the characters before setting it out on the sidewalk to suggest passers by to come inside. As I walked past the business, I peeked inside to see only two people who both looked like employees.

After my appointment I actually stopped to take the picture and noticed the same two faces were still inside. Alone.

Without revealing the nature, location, or any specifics about the business (protecting the guilty), I think this sign is a good example of bad marketing on the following levels.

1)    I despise discounts! They de-value the worth of the products and services being discounted while eating away at precious profit margins. Not many businesses have more than 20% margins across the board.
Yes, you can look at the potential lifetime value of a new customer and justify the actual dollars represented by the single discount to see a financial gain after multiple return visits. But, if doing business with you the first time so difficult that it requires a discount; people will likely not want to pay the full fare on the next visit. If doing business with you is so amazing that it is worth trying for the first time; it doesn’t need the discount.
Promotions, Packaged deals, Gift-with-purchase, Limited inventory, Special offers, Volume pricing, and the like are great ways to incentivize customers. These ideas allow the business to get additional revenues from customers or shift margins to ensure profits are still made.

2)    Wrong Target: Attracting new business is incredibly more expensive than keeping current customers happy. Why make it 20% more expensive while annoying the best customers – the ones you already have?
While this tactic is common among Cable, Internet, Cell phone, and Satellite TV companies, I highly doubt this, or any other, stand-alone retail operation has quite the same lifetime value of customers as these giant corporations do.

Is this good marketing or customer abuse? I’d love to read your thoughts.

What does your marketing say about your business? How do you attract and engage new customers? How do you market on a very limited budget?