I start this by saying that you must believe in the price you are offering for your product or service.
If you as a salesperson — or worse, if you as a sales manager — do not believe in the price of what you sell, then that is a bigger problem than whether you have a tendency to offer a discount.
For sake of argument, let’s say that you do believe in your price, but offering a discount has become commonplace among your sales force. It has been woven into the fabric of how you do business, to the point that you and your fellow salespeople couldn’t imagine not using that approach on a regular basis.
There are no nice ways to say this, but you are killing your profits.
You may not think you are, because you “feel” like you are selling so much more. But quantity will never make up for the profits you did lose by selling at a discount.
The slippery slope of discounting is that if it becomes easy to do once, it will indeed become the standard by which you sell. It may even begin to eat into your belief that the full price is the accurate price.
Over time, you convince yourself that the discounted price is the accurate price. Yikes! Before long, the majority (if not all!) of your sales are happening at a discount.
Stop this slaughter on your profit.
I feel so strongly about this that I think nearly all companies should have policies that prohibit a salesperson from offering a discount without getting approval from their manager. Even then, the use of discounts should be extremely rare.
I’ve worked with companies to implement such policies, and not surprisingly, the salespeople — who previously could offer discounts at whim — responded with much doubt. They were certain that it would become “impossible” to reach their numbers if they didn’t have discounting in their tool bag.
More often than not, though, the opposite happens.
When they are not allowed to discount, the salespeople tended to refine their selling skills so that they were better equipped to sell at full price. What is key to this, of course, is that management too needs to believe in the full price, and they need to build their business model around that price. Plus, they need to give salespeople the resources and training to ensure they know how to sell at that price.
The slippery slope of discounting is not worth going down.
It may seem easy at the time and you may feel a boost of adrenaline. But if you run the numbers in the short term and the long term, you’ll find the end result isn’t worth the momentary elation of a quick sale.
Copyright 2012, Mark Hunter “The Sales Hunter.” Sales Motivation Blog.
