We’ve been working with a customer, diligently talking about their problems and concerns. Educating them about our solution. Trying to move them through our sales process.
They’ve been interested, somewhat. They’ve met with us, asked us the right questions, perhaps given some buying signals, but things drag, the deal becomes stuck. The customer isn’t saying no, but they aren’t moving forward. It’s just hanging there, we want to get them to buy!
So we play the discount card. Too many sales people think resistance is about money, so unilaterally, they offer the discount to break the deal free. “Buy now and we will give you 20% off,” or “We have a special promotion if you buy now,” or…….
Even “free” doesn’t help if the customer doesn’t want to buy (people basing their customer acquisition based solely on “freemiums” listen up). If the customer doesn’t have a need to buy, they won’t buy even if you give it away. If their problem isn’t urgent enough to change, a discount won’t make them change.
It’s a major sales error to using pricing actions to break a stalled deal lose. Pricing actions are meaningless until the customer decides, “I want to buy.” Pricing actions are meaningless until pricing is the only issue keeping a customer from buying.
As much as I abhor discounting, discounting discussions should never happen until the customer says, “I want to buy, but your price is too high.” Until the customer says this, any form of pricing action or discounting is a distraction. It’s absolutely meaningless.
If deals become stalled, we have to understand why they are stalled and overcome those issues. If there is no urgency, we need to create the urgency. As Brent Adamson says, “We need to make the pain of not changing greater than the pain of change.” We have to find a way to get the problems we are solving to the top of their priorities. We need to get them to say, “I have to address this now!”
Using discounting as a way to create urgency simply doesn’t work, until the customer decides to buy. If we use the discounting card too early, when the customer does decide to buy, guess where the discounting discussion starts—it starts at the previously offered discount and only goes down from there.
Sure organizations use discounting and promotions to drive demand–but it only works with people who have already decided to buy. It may move their purchase in, but they already were going to buy, the promotion just impacts the timing.
Discounting is bad period! But it is never a strategy to get a customer who has no need to buy to buy. Stop wasting your time and theirs by thinking it does.
Using the discount card too early only signals that the seller and not the buyer is feeling pressure.
Precisely Michael! Regardless how urgent our need to sell is, if the customer has not need to buy, the deal won’t happen.
Dave, just for perspective.
You can’t understate the irrelevance of up-front discounting to move a deal.
The up-front cost of my product is rarely more than 10% of the total cost of a project. Even if I discount 50%, that is only going to reduce the estimated project cost by 5%.
However, if I’ve demonstrated that the project delivers $2 in return for every $1 of cost…now we’ve got something to talk about, and it’s not discount!
BTW, I’ve embarrassed myself way to many times trying to move deals with this tactic. Oftentimes, I didn’t even know I should be embarrassed…but the prospect did.
Great example of the power of the business case Jim!
Pragmatically, there is an argument for organizations to run periodic promotions, perhaps with a discount. It’s important to recognize all these do is change the timing of a purchase. They don’t make people who don’t want to purchase buy.
To add to this, unless the prospect is emotional/frustrated with their current situation, they will have no motivation to purchase.
I have seen a few times myself exactly that, beating my competition’s price by 25% per year…(on a $1500 monthly invoice, it’s big), they had no motivation. So they called their provider (my competition) and got them to reduce the price.
You can’t win with the price game. You have to find the pain points, and expose them.
Ray, I agree with your comment.
If you offer a discount, you are certainly going to get gamed.
Offer it only to loyal customers and surprise them.
Michael, great comment. You are opening a Pandora’s box. I’ve written a lot before about my disdain for discounting–particularly out of the box. Pragmatically, I know in today’s world, we have to take pricing actions at the end of the sales process. But those have to be positioned in the context of value, etc.
But discounting as a sales tactic out of the box, discounting when the customer doesn’t want to buy—this is all just foolishness and have nothing to do with selling. Sorry, loved your comment, but it got me on my soapbox.
Great comment Ray. To be very crass, it takes no sales ability to win on price! Yet that’s what too many sales people rely on.
David,
Most often, sales people think resistance is a price issue. While that may be part of the problem, more often than not there are other factors that have caused the process to stall.
Rather than offering an unsolicited discount, why not be more direct. Ask them why we are not moving ahead. Try some old fashioned “trial closes” (I really hate that term) to gain agreement, or not, on key issues. Uncover the REAL reasons why you have not gotten a deal.
Cheers,
Marc
Great comment Marc. Until the customer has a need to buy and we understand it, we can’t move forward in the process.
Another effective method is to anticipate the request for a discount and counter with a new proposal – which transfers for some of the risk back to the buyer.
There is an entire sub field of negotiation devoted to this technique – multiple equivalent offers.
Michael, to add on (not wanting to turn this thread into a negotiation thread), we should never provide a discount, without first taking something away from what we’ve proposed—for example countering with a new proposal that transfers some of the risk, etc. Thanks for adding this.
Yes, I agree with this quick strategy:
“I will give you your discount if you give me this other thing I want.”
Or,
“Yes, you can access our loyalty program and its discounts – let me show you how.”
Love this! Thank you for sharing!