DJzone DJ Magazine

http://www.djzone.net/pg/business/bizcolumns/discounts-can-be-valuable.shtml

Discounts can be valuable tool, if used with care

Most salespeople hate it when customers ask for discounts. It's awkward, and although companies like the idea of gaining almost any business, they shudder at the potential erosion of profit margins that discounts cause.

By

Most salespeople hate it when customers ask for discounts. It's awkward, and although companies like the idea of gaining almost any business, they shudder at the potential erosion of profit margins that discounts cause.

 

When customers ask you for a discount, at least one of two things could be going on. First, they haven't seen enough value and don't think the item is worth the price. This can be solved by presenting every one of the great features of your product, but that takes a lot of time.

 

Requests for discounts will decrease when your customers understand everything that has gone into making the product. When top sales people are asked for a discount, they immediately question themselves and their presentation.

 

The second possibility is you are dealing with a customer who is used to asking for -- and probably receiving -- discounts.

 

You and your company have to decide whether you want to give the discount. Saying no is temporarily uncomfortable but sometimes less dangerous than saying yes. Saying yes feels good but can come back to bite you.

 

Just because a customer asks for a discount doesn't mean he's insisting on one or won't buy otherwise. Many people have saved themselves a fortune by asking for discounts. But I promise you, they have run across companies who said no and they've still purchased.

 

How you say no is important. Instead of blurting out, "Are you nuts? This is really good stuff," simply say, "I wish we could." This is a nice way of saying no.

 

It's important that you use the word "we," not "I". If you say, "I wish I could," your prospect will say, "Let me speak with the person who can."

 

But let's say there is a piece of business you don't want to lose. How you say yes is critical to a positive outcome. A mistake here could damage the value of your product and reputation and undermine your product differentiation.

 

Most people who ask for a discount would love for you to match another company's price. If that company's product or service is in any way inferior, don't even think of matching the price. If you do, it says you had inflated margins built into your pricing and your product wasn't worth it in the first place.

 

Decide on the conditions of consideration for a discount. You should get something extra for the discount to help offset the financial loss it brings. Referrals are my favorite exchange in a discounting situation. When you think you have to give a discount, say, "OK, but with the condition that you tell your friends, colleagues and neighbors to purchase from us within the next 60 days."

 

Can you hold your customer to this? No. Just tell your customer you trust him, and give him brochures or some other tool to hand out. I find these customers often follow through on their end of the bargain.

 

Discounts can be a valuable tool and, when used the right way, can definitely help you sell more.