Addressing the “Friend Discount Problem”
Let’s say you’re opening a food truck. You’ve gotten your vehicle inspected, perfected your menu and announced your grand opening to the world. You’re a little nervous. You’re not sure who’s going to show up. You send out an email to your family and friends letting them know that you hope they’ll attend. After all, they’ve listened to your complaints about the trials and tribulations of getting your food truck operational. They’ve tasted your recipes over and over. Of course they’ll be there to support you now that your dream has finally come true.
And they do show up. Of course they do! They proudly stand in line, place their orders, and then… what? Do you charge them? Do you give them food for free? Suddenly it’s a little awkward. On the one hand, it feels strange taking money from your friends, especially after how much they’ve helped and supported you. On the other hand, part of being successful means making money, and if you continually give your product away for free, you’re not going to make very much money.
Anyone who’s opened a food truck, restaurant or bar has experienced this strange moment where you’re not sure whether or how much to charge a friend or acquaintance. Especially if you live in a relatively small city where you tend to know everybody, if you start offering discounts to everyone you like, you might as well just lower your prices across the board. There are several ways of dealing with the “Friend Discount Problem,” and there are pros and cons to each. Let’s talk about a few of these different options, shall we?
No Discounts. Period.
The easiest way to handle discounts is to never offer any. This provides you with a clear policy that you and your employees will have no problem remembering. This is a perfectly reasonable policy, and if you’re pricing your food fairly, you shouldn’t feel bad about charging full price to any customer.
However, just because it’s easiest doesn’t necessarily mean that it’s best for you. Offering discounts or free products to friends, colleagues and regulars builds goodwill and reinforces your place in the community. If you’ve ever been given a free coffee or treat from one of your favorite spots, you know the sense of loyalty and warm-fuzzies it instills.
Of course, as with any rule, you may make some exceptions. Perhaps your immediate family does not pay for pies or you offer free products or a discount for colleagues, suppliers, or clients who have helped you get business in the past. It’s up to you to figure out if exceptions like this make sense for you.
Many small business owners choose to implement a uniform “Friends and Family” discount. The exact number or percentage is up to you, as are the criteria for those who qualify for the discount. You may have no problem offering your sister-in-law her meal for 50 percent off, but what about Amy, your yoga instructor? Thinking about who does and does not receive the discount can get a little tricky. Heck, it may even vary day-to-day depending on your mood and how well business is going. That’s OK – just think about a policy that makes sense to you and do your best to stick to it!
Loyalty Cards or Informal Rewards for Regulars
Offering loyalty cards is a great way to instill the loyalty and warm-fuzzy feeling I mentioned above. It incentivizes your customers to keep coming back so they can earn their free treat, and you don’t have to do any mental accounting about whether the customer qualifies for a discount. The customers who come the most will get the most reward. Sounds pretty fair! Many point-of-sale systems offer features that allow you to easily create reward programs for customers who pay with credit cards.
You can also institute a less formal system of rewards for regulars. Did you make too much of a particular product? Perhaps offer the extras to your regular customers for free. They’ll feel good about their loyalty being recognized and you’ll have put your extra product to good use.
Grateful Gift Certificates
Sometimes when a friend of mine does me a favor (like letting me borrow a car while mine is in the shop or feeding my pets while I’m out of town), I’ll send them a card with a gift certificate for a couple fried pies. They helped me out with a favor, and I help them out with PIE! Everybody wins!
Ultimately, you know your customers and friends better than anyone else. Think about your customer base and what kind of relationship you want to have with them. Consider how many discounts or free products you’re currently giving and do your best to estimate how much that’s costing you each month. Look at the number. Can you afford it? Is it worth the goodwill you gain by giving the discounts, or is it a financial burden? These are questions only you can answer. Instituting one (or some combination of two or more) of these policies might help you avoid the awkwardness of making an on-the-spot judgment call, and help you and your friends maintain healthy boundaries between your business and your relationships.
Remember that your friends want you to be successful, and more than likely, they’ll happily pay up to help support your growing business.