To Discount or Not to Discount - What's the Risk?
Discounting is a four-letter word. If you reduce your price, are you going to decrease the value of what you deliver, or decrease the impact that you will have on the customer?
Think of some of the organizations you purchase goods or services from, but will never pay full price. Think of any conversation you have had with a customer where price has become the focal point.
Mike Conner is back this week, and we briefly discuss what he has been up to, and dive into the details around the risks of discounting.
We hope you enjoy the discussion, and look forward to your feedback on Twitter, LinkedIn, and Facebook.
- What are some of the things that have popped up on LinkedIn that are interesting?
- How should you approach discounts?
- What’s the difference between selling value and taking a discounting approach?
- What advice do you have for a rep who knows their customer is looking for the discount, but your sales manager is saying you should not?
- What about competitive situations? How does discounting apply?
- How do you help a client move away from a discounting expectation to something that is more in line with how your other customers purchase your product?
- What are some other approaches you can take, and different trades you can bring to the discussion?
- Lesson learned - early career/mid-career rep - realizes, they may be doing their client a disservice.
- When the focus changes to discounts, value gets lost in the equation
- The focus should be on delivering value to people, not creating new buddies. People will not make decisions just because they like you.
- As a buyer - we will ask for discounts until we feel like we have gotten to the floor.
- Discounting is a really weak crutch
- The value you deliver should go far beyond pricing.
- Look at your ability to validate that the product will work, will solve the customer's problem, will do what you said it would do as part of the value you deliver.
- Have value attached to everything - make sure the client understands what is involved.
- As an example, when working with a product that includes setup fees. It is necessary to take a look at what’s included, identify the things that are unnecessary, challenge the need, and get fair value for the services delivered. Don’t let these things be arbitrary.
- Our approach - we will give you the most value in the first proposal we will deliver.
- Sales, unfortunately, drives a lot of the negative behavior. We get trapped in a race to the bottom, the discounting approach.
- In our experience, the initial discount is a gateway to the discussion for further discounts.
- Know your competition, understand their value proposition, the value they deliver, and that you deliver. Don’t get caught in the trap of chasing them down the discount rabbit hole.
- Once you have established the behavior it is difficult to reset expectations.
- Have confidence in your pricing & don’t take the bait.
- We know it is hard, especially at the end of the quarter, end of the year.
- Sales managers - should not reinforce bad behavior.
Call to Action
- What's your approach to discounting?
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