Instead of Discounting, Back Some Value Out of Your Proposal

Last minute discounting has become so prevalent that many companies have come to depend on it as their default sales strategy. Employing a go-to-market strategy of being the lowest cost provider is one thing, but dramatic, tactical discounting on every deal will erode your company's margins and leave you digging a deeper and deeper hole in which your company will ultimately bury itself. I don't want to give you the impression that discounting is never appropriate. I can think of three scenarios where it is required:

1. When a company has mispriced their offering. Let's face it. Times have changed. Competition is fierce. And yes, as much as we don't like to admit it, prices and fees have been forced down in some markets. If everyone else is now selling what you sell for $1.00 and you're still selling it, just as you always have, for $2.00 and you can't prove you can deliver a dollar's worth of additional value for the customer, your pricing is too high--way too high. Call it a discount, or call it a price adjustment, in this situation you've got face reality and sell your products at a price the market will bear, or you won't sell very much at all.

2. As a token concession to close the deal. I don't see a problem with "rewarding" a buyer for signing an order within your timeframe, for example. Understand, I would much rather provide other concessions that don't cost my company money and don't educate my customer that whenever I am going to ask them for an order, I am going to give up part of my margin and commission. But I do live in the real world and understand that for my clients, pricing concessions are sometimes required to get the deal signed.

3. When you haven't done an adequate job of selling the unique business value your product or service will provide the customer. My clients will tell you I am never happy in a situation like this, but if you've not done the best selling job, and there is some room for a discount, and you need the deal, discounting may be better than losing the deal on principal.

How do you avoid discounting?

I talk a lot in my book, How Winners Sell, about the fact that to succeed in business to business sales today, you must sell business improvement, not products or services. That means differentiating yourself from your competition in the unique value you, your products and services, and your company can provide toward your customer achieving their corporate, divisional, business unit, department, or government agency goals. Have you transitioned into the mode of creating customer demand by targeting accounts--getting in before they know they have a need, and establishing yourself as a knowledgeable, trusted, and patient advisor? If not, you'll continue to be on the receiving end of all sorts of one-sided customer demands, mostly taking the form of answering requests for information, doing presentations, demonstrations, fighting the constant battle against having your offering commoditized by the customer, and being on the receiving end of strong demands for discounts. We've been taught over the years to bundle our products and services where possible to provide the customer with a single investment number. That way, we were told, they can't nickel and dime you, and can't slice up your offering, able to say no to pieces they don't want or need. But now times have changed and when you think about it, that's exactly what you want to do.

If you sell products or services that can be componentized, sold in pieces or modules, or in phases, you're potentially in good shape. Scenario You know your competition is going to come in with a substantial discount, as they have before. Your sales effort must include:

?Assuring yourself that the customer is not making a decision solely or primarily on price. This question must be asked again and again of key decision makers.

?Getting agreement from the real buyer that you understand their business objectives and that your offering can help them achieve those objectives. This method does not work unless you are dealing with the real buyer.

?Finding unique areas of additional value (on top of their existing requirements) that you can provide through the capabilities of your product or service offering.

?Management support for potentially selling part of your offering now, and the rest later on rather than selling the whole thing at a discounted price.

In cases where you know your competitors will be discounting, you'll need to offer several investment options to your customer. Alan Weiss, the consultant's consultant, suggests providing three opportunities for them to say yes.

If you offer your prospect three options to buy--let's say for the sake of labels, Platinum, Gold, and Silver--and you've done a good job of selling the business value of your offering--you can avoid having to concede more than a nominal discount. Your plan here should be not to discount, but rather to back value out of your proposal to meet the prospect's desired investment level. Presenting three options lets you do exactly that. The customer gets to determine how much they want to invest and will enjoy the resulting ROI associated with that level of investment.

Here are the three options:

The Platinum Option

?Gets the customer what they need (and want)

?Highest level of investment. You might ask for a 10-30% premium over the Gold level for this option, depending on the value you believe you can deliver to the customer.

?All the features, modules, components, capabilities available

?Your best resources

?Quickest time to value

?Priority service -- A special 800 number, top of the queue, 24 x 7 x 365

?The highest ROI

?Other perks, such as quarterly meetings with your CEO, special invitation events, input into your product development plans

The Gold Option

?Gets the customer all of what they need (and a few wants)

?Budgeted level of investment. This is aimed right at the prospect's budget level.

?Most/many of the features, modules, components, capabilities

?Proven, talented and dependable resources

?Quick time to value

?An attractive ROI

?Other perks, such as quarterly meetings with your VP of Service, special invitation events

When your prospect tells you your competition has come in with a very low price, you discuss calmly with them the fact that you have an option (the Silver option) that will provide them with what they need at a competitive price. You will already have differentiated yourself from the competition in a number of areas: understanding the customer's business, industry, opportunities, challenges, competitive and customer pressures, and built rapport with the real buyer. In addition, you've professionally educated your prospect on the risks that befall companies who depend on tactical discounting to win. (See my July 2003 article, "How to Outsell a Competitor Who Slashes Their Price to Win.")

The Silver Option

?Gets the customer most of what they need now, and the rest in "phase two," next quarter or next year

?The lowest level of investment, aimed 10-30% below the Gold level, depending on how severe a discount the competition is going to offer

?Some of your total array of features, modules, components, capabilities. The rest can be purchased later.

?Talented and dependable resources

?Reasonable time to value

?An ROI that meets their corporate requirements

What will the customer do? The may tell you they want your Platinum option at the Silver price. If you've done an effective job selling the business value of your product or service and built a relationship with the real buyer based upon trust, you can look them in they eye and tell them it just isn't possible. What will they do then? My clients tell me that more often than not, they'll go for the Gold or Platinum option.

©2004 The Stein Advantage, Inc. All Rights Reserved.

Before founding The Stein Advantage, Inc. in 1997, Dave Stein spent more than 20 years employed in a diversity of executive sales and marketing roles for corporations worldwide. Dave consultants with, coaches, speaks and trains on competitive selling strategies, helps companies to strategize specific, complex opportunities, organize a sales organization, present and position themselves with analysts in the best possible light, as well as to recruit and hire the best sales reps. He is the author of the Amazon best selling business book: How Winners Sell: 21 Proven Strategies to Outsell Your Competition & Win the Big Sale, Dearborn Trade Press, May 2004. For more info: http://www.HowWinnersSell.com or contact his office at viv@HowWinnersSell.com or call (845) 621-4100.

The Benefits of Buying Used Store Fixtures

The difference between antique or vintage store fixtures and used store fixtures is simple: antique... Read More

Creating Your Perfect Pitch!

Why should you describe your business to others in 5 to 10 seconds?How long do... Read More

Cold Calling Pressure Reduction

Who likes cold calling? Most salespeople don't like cold calling, and do as little of... Read More

Why Should I Buy From You?

Virtually every business you contact has this question in their mind. To truly maximize your... Read More

Whats Your Clients Style?

When it comes to effective selling, one simple fact never changes: Selling is a relationship... Read More

Nothing Happens Until Someone Sells Somthing

You can always tell a good salesperson, they are always on the look-out for opportunities... Read More

Generating Sales Leads

Any company that relies on selling a product or service needs strong sales lead generation.... Read More

Creating More Effective Proposals

The need for good proposals - the business kind, not the marriage kind - struck... Read More

Another Warm Lead

Saturday morning, I sat in my pajamas, sipping strong, black coffee and petting Ms. Kitty... Read More

How To Get Your Mail Past The Gatekeeper And Into The Hands Of The Decision Maker GUARANTEED

There are several ways to get your information into the decision maker's hands.Use "The Stealth... Read More

An Introductino to Insurance Lead Generation

It is vital that insurance salespeople have a steady stream of leads. Often, people don't... Read More

Lead Generation Sins - 7 Of Them!

I really just don't get it.How can so many businesses be missing the lead generation... Read More

How to create your own Unique Selling Proposition

Why would a prospect buy from you rather than from your competitor?How do you outsell... Read More

Asking The Right Questions

On an introductory call, how do you gather all of the information that you need... Read More

How To Write A Riveting Sales Letter That Closes Sales

How do you get people's attention and build their interest to take the time to... Read More

15 Ways To Get Really Motivated

First, recognize that motivation is an inside job. The word motivate means to impel, inspire,... Read More

Selling Skills - How to Handle the Dreaded Question Whats The Price?

I've written previously about how to attract customers and how to manage the sales process.... Read More

Too Much Empathy Will Cost You Money

Ever have a prospect start out your sales call by asking you "so how much... Read More

Why Arent They Buying?

You've polished your sales page over and over againuntil it's gleaming with benefits. You're gettingplenty... Read More

Refining Your Telephone Prospecting Techniques To Be A Master Closer!

Let me create a picture for you. This is the best way to illustrate my... Read More

Referrals: Getting Good Business By Doing Good Business

Whether you're a conventional sales person, a professional ? such as a dentist or lawyer... Read More

Why People Use Long Sales Copy

Have you ever wondered why some people use long sales letter? Here is the answer:... Read More

Sales Letters - How to Write Them

You could just send out your brochure to potential customers but it's much better to... Read More

Business Lessons Learned At The Mall

Normally in this column I dispense highly-intelligent small business advice in response to thought-provoking questions... Read More

Sales Training from the Ghostbusters

Picture this scene from the 1984 smash comedy movie from Columbia Pictures, Ghostbusters: Dan Aykroyd... Read More

3-Levels Of Successful Selling

Any selling approach that lacks a proven strategy, a practiced proficiency for its application and... Read More

The Benefits of Metal Store Fixtures

Your choice of materials for store fixtures includes wood, metal, plastic and conglomerate materials such... Read More

Great Telephone Skills

Having good telephone skills is crucial as the call may be the catalyst for a... Read More

5+5 = Your Dream

JOHN DI LEMME ON "5 + 5 = Your Dream" I know your thinking...Okay John,... Read More

Selling with Purpose

Selling With Purpose What is it about selling that makes you afraid? Do you get... Read More

Long Sales Letters vs. Short Sales Letters

Everywhere I turn, I'm being asked to weigh in on the issue of whether copy... Read More

Sell More Products and Services with Testimonials

Testimonials are all-important to sell anything. You may already have testimonials for your new book... Read More

Im A Second-Story Man

Can you say who you are and what you do in two sentences or less?If... Read More

Aikido and The Art of Cold Calling

Imagine being in a crowded concert or bar. All of a sudden, a fight breaks... Read More

How to Sell Your Products Without Competition

Selling your products at shows can be difficult when you have a lot of competition.... Read More

Revenue Growth Through Alliances

Any company in today's global economy must eventually face the issue that if it is... Read More

How to Write Effective Selling Proposals

Depending upon how much you enjoy writing, writing sales proposals can be a joy, purgatory,... Read More

Do Your Customers Buy On Price Alone?

Here are four simple things you can do to take price out of the equation!It's... Read More

An Introduction to Mannequins

Just about every clothing store uses mannequins. There are many types of mannequins made of... Read More

Sell More: How to Get Motivated Buyers To Call You First

How many sales opportunities have you lost to competitors who seemed to have the inside... Read More

Dont Let Rattlesnakes Scare You

Recently I was out trail running along the South Fork of the Yuba River. The... Read More

Diverting the Flow of Customers to Your Business

I was a lucky kid when I grew up. Lucky, because I had a big... Read More

Sorry, But Im Not Buying From You!

Former General Electric CEO and legendary manager, Jack Welch, nailed the problem recently when he... Read More

Pinging for Success: Creating Search Patterns

One of my first internship jobs as a college student was working for a defense... Read More

Chicken Little And The Disintermediation Myth

If Chicken Little were alive today he wouldn't be running around forewarning us of the... Read More

17 Tips for Bringing Your Event to Life

Your job as an event planner doesn't stop with the meeting in the company boardroom.... Read More

Create A Killer Product by Writing Your Sales Letter First!

You may not realize this, but when if you are in the early planning stages... Read More

How To Sell Your Products or Services on Value And Stop Selling On Price Alone

Have you ever met with, or talked to a prospect that wasn't ready to buy... Read More

EXHIBITORS - Check Your URL

How many of you have a corporate web site? Everybody says "Yes".How many of you... Read More

Gic Number For Writing Sales Letters

When I write sales letters for my clients, one rule I always start with is... Read More