I’ve been to a sales training event this week and was struck by how many people think that the way to deal with a financial objection is to discount price. Discounts should be a last resort.
I was listening to an interesting interview on pricing strategy a few days ago and the ‘expert’ posed the question, ‘What happened to all the discount businesses that were such big businesses years ago?’ He named a lot of American companies from yesteryear. The striking statistic was that none of them is still trading! There has to be a lesson there.
As our trainer reasonably pointed out, if you discount your price by £200 that is £200 off your profit. OK so you might think that it is important to discount in order to secure the first sale and that you can make the money back on subsequent sales but how easy will it be to raise your prices next time? Most customers think that, if they negotiated a discount once, they’ll be able to do the same next time.
The first thing we need to do when faced with a price objection is to explain the value of our offer. I remember years ago buying my first printer. As a start up business I was going to buy the cheapest but the salesman pointed out that it would be false economy because I would spend much more on consumables than if I invested in the next model up. I bought the more expensive model.
Of course to sell on value we really need to understand our product, our competition and our customers. That requires time, effort and skill which is maybe why so many people just give the discount.
I know that in the current economy everyone is watching their pennies but that doesn’t mean they always want to buy the cheapest. The combined effect of the sluggish economy and a greater concern for the environment means that many people will be buying for the longer term. They’ll want a quality product that will not need replacing in 10 minutes and most will be prepared to spend a bit more so long as we can convince them that it will be worth it. We need genuine facts and figures and, ideally, some quality testimonials.
So before you discount on price think of an alternative counter to your prospect’s objection.