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Discounting And Defending Value

by David Brock on March 30th, 2021

We try to create value with our customers.

Our value has various elements.

  • The value we bring to our customers in helping them navigate their buying journey. After all, we are experts, while our customers struggle to buy.
  • The value our solutions create in solving the customer problem, or enabling them to address new opportunities. Hopefully, this is quantified in terms of ROI or some other financial metrics.
  • The personal value we create for the individuals involved in the buying process. Things like, “keeping their job,” “simplifying their lives,” etc. While difficult to quantify, these are important elements of the value we create.

Through the entire buying cycle, we focus on value creation and articulation. We try to demonstrate the superiority of our value, relative to the alternatives the customer may be considering.

Then finally, to get the deal, we discount! Sometimes very steeply.

What does the customer think? How do they view the value we created in the context of the deep discount to win the business?

They might think, “We got all that value for less than we originally thought….” Mathematically, the ROI increases.

Or maybe they thing, “Was all that value real? If they are so willing to discount, was the value they talked about real?”

Have we actually weakened our positioning? Have we created doubts and uncertainty with our customer? Are they as confident in making a decision for us, as they might have been?

Pricing and value go hand in hand. If we create and defend our value on the basis of certain pricing, then later significantly reduce our pricing, what are we communicating, perhaps unconsciously, to our customer?

Deep discounting to get an order diminishes our value creation and articulation tremendously. And it’s forever. Over time, the market learns that we don’t believe in our value ourselves. We train the customer that our value is significantly less than what we say, because we are willing to significantly discount to get the order.

Are you building your customers’ confidence in your value? Do you have confidence in your value and are you willing to defend it?

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