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A Thai Perspective

On a quick jaunt through Koh Sian Road, Bangkok, Thailand, I stumble on a very fashionable set of trousers (I thought so anyway!)  I questioned the lady at the stall on the going price ... "how much?"  650 Baht came the reply (approximately $27 NZD).  Now based on previous experience with the Thai locals I understood that this didn't really mean they wanted 650 Baht for the item!  In fact it is widely accepted that you will bargain with the vendor for a better price.  They are ALWAYS prepared to discount their price!

This in mind I managed to pick up the same trousers for 250 Baht (NZ$10) following a bit of back and forward negotiation.  Because the whole Thai society revolves around price discounting, never will anyone accept the asking price and are always reluctant to pay it - regardless of the associated value for money.  Everywhere you are "taught" to search for a "special price".

Price Discounting Destroys Trust

This process destroys the trust that people have in your product or service.  The same applies to the fitness industry.  If you have a reputation for discounting prices people will lost the trust in your service.  How do they know that you are not preparing to run a special next week ... after they have paid full price!  They will  always wait for the next "special".

There is nothing unique about price.  (Generally) People market and compete on price because they know no other way!  I continue my stroll through the market to cries of "half price", "special price for you" or "200 Baht today only!"  I think to myself that if noone discounted their prices - people would be prepared to pay the initial asking price - they wouldn't know any different!

Price is NOT the issue

Looking at the fitness industry again, we see many centres STILL presenting price lists and giving out prices over the phone.  Here you are educating prospects that the only difference between your service and the person down the road is price.  If this is the case ... that's fine.  However, if you believe you have a superior service, then get the prospective member to your facility to find out why!  Encouraging a member to join is all about uncovering their needs / wants / emotional pain and showing how your can help them achieve their goals.  A well documented sales system will assist you in completing this ( for more information on sales systems see the members only section of the Gyms.co.nz website).

Negotiations stalled as my girlfriend and I tried to bargain for some "Oakley" sunglasses.  We had decided initially that we were only prepared to pay $X.  However convinced of the need for (perhaps not the quality of) the sunglasses we paid well above our anticipated purchasing price. 

If you are providing quality products and / or services then there is no need to discount your price.

When it comes to fitness - Joe public will pay "whatever" you ask so long as they see the value in what you are providing.  In the sunglasses case we paid more than we wanted because we saw the value in having "trendy" sunglasses in the glaring sun and heat of Thailand. When selling health and fitness you couldn't possibly have an easier product to sell - quality of life ... so why discount it?

Do you wish to attract the price sensitive customer?

Would you rather have 1000 members paying $500 or 500 paying $1000?  I know what I would rather service.  Discounting your price will mean that you attract the price sensitive customer - the one that disappears down the road at the sign of the next special... you want to attract the stable long term customer to your facility!

A Thai Example

I walked into a brand new fitness facility in Thailand.  This centre had a wide range of benefits including - brand new equipment, a special VIP room with 1 on 1 attention 100% of the time, a  separate kids gym to ensure that they cater for the whole family, a wide range of classes ... and much more.  I asked to have a look around. 

They sat me down with a sales consultant, which I was pleased to see (if you don't have someone focused solely on sales at your facility then you should have!).  I discussed that I was not a potential member and would just like to have a look around... All going well to this point!  Then immediately he proceeded to pull out the price list and tell me about the possibility of discounting the short term (1 week) membership for me while I was here.  He had done a good job uncovering some background information, however he suddenly undid all his good work by trying to discount his price.  The consultant thought price was an issue ... it wasn't.  I was just being nosy!

The DO's and Don'ts of Referral Marketing

1) Reward Customers for Referrals and they will continue to refer.
During our Thailand visit referral marketing was rife throughout the city.  You may or may not be aware, but Bangkok tourism operates on a series of 'kickbacks'.  For example: Street walkers posing as civilians refer you to Tuk Tuk drivers for tours of many of the cities tourist sights - or at least that is what you are lead to believe!  Tuk Tuk drivers take you to many of the 'sights' but also encourage you to visit the fantastic once in a blue moon 'sales' at various tailors and merchandise stores.  Once a sale is made at the store then the street walker and the Tuk Tuk driver get a commission for their referral.  Because of this 'reward' the Thai locals will continue to refer people to the appropriate stores.
2) Ask for referrals - If you do not ask you will not get.
On our journey with our 'friendly' Tuk Tuk driver a number of times we were informed of the (supposed) best fashion stores, tailors etc and asked if we would like to take advantage of their great today only sales.  A couple of times we said yes and went and had a look - if we weren't asked then we wouldn't have gone!

The best time to ask for referrals at your centre is during point of sale.  If you are joining a new member then ask them at the end of your sales process if they have any friends that may be interested in joining / a trial workout / training with them etc.  Make the new member aware of the reward for them if their friends join.

3) Make your customers want to refer to you.
Now here is where the Bangkok scheme falls down.  Many of the links involved in the referral system will use any means necessary to get you to the shop in their quest for commission.  In fact we were lied to, tricked and swindled a number of times before becoming aware of their deception.  At this stage we became less than impressed and not only did we avoid Tuk Tuks for the rest of the trip, we also advised other foreign travellers of the need to avoid these places / people... not good for ongoing / repeat business.  If we were happy with the service we had been shown, and had not been lied to we would probably have referred or suggested to others that they do a similar trip.  Remember: If you provide your customers with good service, honesty and assist them in achieving their goals they will want to refer friends to you.