The Downside of Discounting to Make the Sell

If you’re in sales, you’ve discounted to get the sell. Heck, it might be an everyday occurrence for you. In a previous life (30-years ago) discounting was something I did on every sales presentation. It’s how I sold. I’d justify the list price (why it’s worth it), share my urgency (I had idle crews), and then offer a discount. I made sells but, I also set up future problems. Although discounts are part of the sales process, they aren’t always the wisest thing to do. There can be a downside of discounting.

Is Price the Priority?

Discounts can take the focus away from what’s important. Yes, the price is important, but is it what’s most important? Most of us have bought a discounted product only to be disappointed when it didn’t fit our needs. Focusing on price and discounts can lead to losing sight of the goal, and that’s to solve a problem or fill a need. If a product doesn’t do what you need it to do, does it matter how large the discount is? And that’s one downside to discounting.

It Can Lower Your Products Perceived Value

I perform with three friends in a weekend classic rock and roll band. Since 2008 I’ve done most of the booking. In other words, I sell the band to venues. Since we don’t use a booking agency or pay for stagehands (I run the sound and lights from the stage), we have less overhead than much of our competition. I assumed this would be a huge advantage, but I found it’s not always a positive thing to undercut the market. There are venues we’ve never played, who continue to pay a premium price to agents. I wondered why until a club owner told me we were too cheap, he wanted the high dollar bands for his club. A discounted price adversely affected the perceived quality of the product. There was a downside of discounting the band.

Discounts Can Become the Expectation

I was talking with one of our sales consultants who shared this story. He submitted a bid to one of his customers. Although they’d done business with us for several years, they shopped our bid to other providers. Don’t get me wrong; smart clients shop your price, that’s good business. However, the salesperson was contacted by our customer and informed we had the most competitive bid, but … they wanted to know what their discount would be. They’d become so acclimated to discounts that even when we beat our competitor’s price they asked for a discount. The worst part is we created this monster. And that’s another downside of discounting.

So, What Can You Do About it?

One way to overcome discount fever is to refocus your customer on their priorities. Ask the customer what’s most important to them, price or a product that gets the job done. When you ask this, their most likely answer will be both, price and quality. Thank them and let them know you’re on the same page. You want to give them the best price for what they need. What you don’t want to do is try to lower the price by offering them a product that won’t solve their problems or fit their needs.

Next, reiterate what they want to accomplish and tie each step into the features of your product. Explain what your product does, why they need it, and what it does for them.

You may also need to establish a budget by asking them what they planned to invest, so that you can recommend the best solutions for the money. However, let them know that you would rather walk away than give them an inferior product just to meet a price.

Okay, so it’s not going be that simple, is it? Nope, probably not, but if you take this approach, hopefully you’ll begin a conversation with your client based on their needs not only on the price and avoid the downside of discounting.

Photo Credit: https://unsplash.com/photos/fJTqyZMOh18

By |2018-09-20T13:42:13+00:00September 20th, 2018|Sales & Marketing|

About the Author:

Randy Clark is the Director of Communications at TKO Graphix, where he regularly blogs for TKO's Brandwire. Randy is passionate about social media, leadership development, and flower gardening. He is a beer geek and, on weekends, he fronts the rock band, Under The Radar. He is the proud father of one educator, one principal, has four amazing grandchildren, and a public speaker wife who puts up with him. His twitter handle is: @randyclarktko, Facebook: Randy Clarktko, Google+: Randy Clark on G+