They decide to eliminate all discounts. In Year 5 they end up with fewer real customers than they had in the first place. Discounting, in other words, is a serious trap. You educate the customer to think only about price, and not about the quality and services provided by the institution. The image of the bank, for example, is one of cheap discounts, rather than personal attention to its customers.
All products suffer.
In another example of similar problem, the restaurant manager of a large hotel notices that few people are eating in the restaurant on Wednesday nights. He decides to pep things up. On Wednesday nights, he brings in magicians, Mexican bands, belly dancers. He attracts a large crowd of locals who come for the excitement. Meanwhile, the regular businessmen who are the life blood of the hotel's business find that they cannot conduct business in the restaurant on Wednesday nights.