Everybody wants a deal
But there are both downsides and benefits of it.
Downsides: Do not forget, that discounts are the laziest path to customer conversion.
- Discount-dependant growth
- Risk of degrading buyers’ perception of the value
- A bad reputation as a “cheap solution”
Benefits:
- Drive your win rate
- Shorten sales cycles
- Keep a customer happy
There are a variety of reasons behind the discounting requests, some examples:
- Competition
- Real Budget Constraints
- Company size: Enterprise vs Longtail
That’s why value selling is the only remedy.
What to do when your customers ask for a discount?
- Qualification of the discount request – Understand: Is your prospect using “your offer” to get a better price from another vendor?
- Understand: Do they really need the discount? Or they just ask it for the sake of asking
- Identify a Bad vs. Good Discount Request
An example of definition, If the customer is unwilling to commit to anything in return for a discount – A bad request
If the customer is open to negotiation to give and take – A good request
- Use discounts strategically to both bring down sales cycles and increase the # of deals that close.
- Find out the reason, ask “why?” in a polite way to identify if there exists a “Value Problem” or “Budget Restrictions”
- What would be a reasonable discount? Ask to understand the gap
- Ask questions to confirm that the price is the only obstacle
- Use your weapons such as “flexible payment” or “free trial – whatever perks you are offering
- Be ready for the “quid pro quo” exercise! What will you get when you give the discount? Upfront payment, longer contracts, or referrals can be good examples
- When selling to enterprises, sometimes you need to provide discounts to two different parties:
- The champion that’s driving the purchase
- The procurement agencies that receive a bonus based on the discount amount they get
Be ready not to face last-minute surprises 🙂
Bonus: Let’s remember Jason Lemkin’s words:
