Even as the economy improves, sales people face many challenges and pressure in executing their sales. One that is present no matter what the economy is doing is pricing pressure, usually in the form of discounting.
Many sales people give in to the pressure just to get the sale, and it is easy to see why, give up a few points and get the deal, or the dark alternative. The problem is that often those few discounted points could be the difference in the deal being break even, profitable or not. Depending on the nature of your offering, length of commitment, there are scenarios where if planned, you can recover the amount discounted in subsequent years, but it has to be planned. Most of the time, it is not planned, reps are put to the wall, rather than going in armed.
Some reps will raise their initial price, building a buffer to be able to give a “discount”, and still meet their price. Done right, for example using the WOW method, it can be done. The key to making it work, is knowing how you will change the deal on your side, changing the offering, or taking out components, to accommodate the demands they are making.
For example, there is a definite value to case studies in my business, assuming other aspects of the deal are in place, and someone is looking for a price concession, I may trade for one, if the discount demanded is too large, then not.
Anything shot of the above indicates one of three things:
1. The client can’t afford you – First lesson they teach you in real estate is don’t show a buyer something he can’t afford. The same is true in most sales, not every appointment is worth taking, and not every prospect is worth pursuing. In most instances, you know it early in the process, but you give into your emotions and keep going. Look if you need the practice fine, but remember, you’ll never get that time or money left on the table back.
2. Poorly executed sale – Assuming the buyer could afford it, and the value is there, then the only conclusion is that the value was not well communicated, impact and upside not demonstrated. The why’s and how’s will vary, but the reality is we failed to execute the sale in a way that the buyer was able to grasp the value.
3. A lack of respect on the part of the buyer – This is the one that should upset sales people most, yet they put up with it. If you conducted the sale properly, not only communicated the value, tying it to client requirements, including budget, then you have to conclude that the buyer has a lack of respect for you. Ask yourself, would they do that to someone they respect? Would you? If not then why would you put up with it?
Of course, if you read this blog regularly, you know that one way to avoid being put in the position is to have a robust and viable pipeline of prospects. If you know you have alternatives you won’t put up with the kind of disrespect mentioned above. The choice is simple, put a little effort into prospecting, or put up with the disrespect.
There you go, never thought the cure to discounting is prospecting, but it is one.
One final note of interest, I find from firsthand experience that people I cold call, people who are clearly in the Status Quo Zone, are the ones that have been least likely to play the discount game. Why you may ask? Short answer they got the value, which is why they moved out of the Status Quo with you; long answer, that’s a post to come.
What’s in Your Pipeline?
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