Sell Value, Don't Buy Business

A year ago, Prospects to Partners conducted a survey to find out how often sales reps discount to get business. The results were surprising...67% of sales people offer to lower the price…without ever being ASKED!

The number is even more surprising when you take into account that The National Retail Association reports that only 14% of consumers buy on price. Why is it that sales people feel the need to offer a discount?

I posed this question at a recent workshop and had a flurry of answers…
-“It makes the prospect feel like they got a good deal.”
-“It shows I was taking care of them.”
-“It was a nice gesture.”
-“I didn’t want to have to negotiate price.”

All are valid thoughts, but none of them justify spending company money to gain a client. What many sales professionals don’t think about is that offering a discount is no different than spending company money. It’s either $1,000 in or $1,000 out – so a $1,000 discount is $1,000 less revenue at the end of the year. Instead of selling the value the business is bought.

As a country, we don’t negotiate much. If it’s not a car or home, we typically don’t get into heated price negotiations. When was the last time you were at the store and asked for a 10% discount on all of your food? What about the last time you were at the store and the clerk told you that you were getting a 10% discount because it’s a “nice gesture”? So why would a sales professional offer a discount off the top?

What is your product or service truly worth? Offering a premature discount is just plain lazy. If you effectively eliminate objections, the sale won’t come down to price. 

A $1,000 discount may only cost the sales rep $25 of commission… but that client over a 10 year period decreased company earnings by $12,000! If all clients receive the lazy sales rep discount the detriment to company earnings is well into six-figures.

Most sales reps discount because they don’t understand how to sell value. What is motivating that person to buy? It will fall into four categories:

1.    Return on Investment
2.    BRAND
3.    RISK
4.    TIME

If you understand the prospects motivation to buy, you have a better chance of selling the value.

One final thought… don’t confuse price objections with price statements or price resistance:

Price Statement: “$1,000 huh?”
Price Resistance: “I don’t know about $1,000..”

These types of statements allow you to uncover objections and eliminate them so you can move forward with the sale… you should WELCOME these types of statements. Only discount if you get a price OBJECTION… “I won’t pay $1,000.”

If you get a true price objection you’ll have to decide if the client is worth the discount or if it’s better to keep your value and move on to the next prospect.

Hold to your price and value. Then watch your commission checks increase and the company's earnings increase.