Everyone likes a deal. When I buy something I always ask for a better price than the list price. Well, okay, not everything – I don’t ask the grocery store checkout person for a better price.
But, grocery stores still do understand that people love discounts, it’s clear by the massive amount of coupon campaigns going on. There are television shows on discounting, and haggling for better prices is an expected part of the shopping process in some cultures.
As a sales rep or sales manager, should you negotiate or discount to win business? In most industries the answer is yes. There are exceptions to every rule but here are 5 tips for a successful discounting strategy.
Only apply a discount if you feel a customer is going to buy something
Or a customer who has shown strong intent to buy. A discount can help push your customer over the edge. There is a lot of psychology and emotion involved in making a purchase. People like to think they got “a deal” even if that deal is given to everyone else. People like to tell their bosses they got a great price, husbands like to tell their wives they didn’t pay full price.
Try to standardize as much as you can
There needs to be some consistency with how much you will negotiate. This is especially true with large sales teams. You don’t want Sales Rep A giving out better prices than Sales Rep B. This will create arguments amongst your sales team and can create a poor customer experience.
You don’t necessarily have to hand out large discounts
Sales reps have a habit of jumping to 15% off when a customer asks for a better price. Going back to the point above, people just want some sort of a deal. Often 5% off will be enough to close the deal.
As a sales manager try and give something that doesn’t impact revenue
If your software application provides 1 hour of free training to every new customer, offer up 2 hours at no extra cost. You can gauge if it was likely that they would have purchased extra training anyway, and if there was no chance this is a better option than losing revenue.
Build discounting into your projections
Don’t be naive and think that you discount less than you do. Whether you are a sales rep or manager, if you have a pattern of discounting then build it into your sales projections.
There are many sales leaders that don’t approve of discounting. In a perfect world I would also not want to discount, but unless you’re the clear market leader you end up fighting for every deal. Even market leaders often will discount and negotiate with customers.
Discounting, if managed correctly, can be a great tool in your war chest. Approach discounting strategically and you’ll win more deals.
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