I once received a phone call from a salesperson complaining about the customers he had to deal with.
His issue was that no matter what he did, it seemed like the customer was rarely happy.
I asked him one question which told me immediately what his problem was.
The question I asked was: “What % of your customers buy due to a reduced price or some other type of a discount?” His response? “Nearly everybody.”
I then asked him why that was, and his response was that the prices his company offered were really too high compared to what they should be charging. A discount was necessary. He even added that the prices were higher than what their competitors were charging.
Bingo! Problem discovered.
The problem he had was his company’s engrained habit of discounting price to gain sales. This was doing nothing but attracting low-level customers who didn’t appreciate or value what they were buying.
People who buy on price are never happy. They have a feeling of entitlement and believe that because they bought on a discount, they deserve something more.
It’s a sick perverse disease I’ve never been able to understand, but I’ve seen it a thousand times. Customers who buy on price are simply never satisfied. More importantly, they won’t stick with you unless you continue to offer them a progressively better and better deal.
For this salesperson I was talking to, it came down to one simple thing — his selling model was attracting the wrong type of customer.
A customer attracted on price is simply never going to understand the full value of what you have to offer. I told him the easiest way to get better customers is to stop discounting and look at raising your prices.
Did it work with him? Time will tell, but what I can tell you is having had this exact same conversation with hundreds of salespeople and companies over the years, I can say it works. Stop discounting and even raise your prices and you will attract better customers.
Will you wind up with nothing but perfect customers? No, of course not. There are always outliers no matter your level of pricing.
What you will wind up with is a much better mix of customers who will truly value what you offer them.
For more information on the Hidden Dangers of Discounting, check out my free eBook!
Copyright 2014, Mark Hunter “The Sales Hunter.” Sales Motivation Blog. Mark Hunter is the author of High-Profit Selling: Win the Sale Without Compromising on Price.
Mark this so true. It is important to understand and know your value and make sure your customers knos it. If price is the main issue time to move on. Thanks for sharing.
This article doesn’t substantiate the premise. It should offer a successful case study or two. In my business I’ve had plenty of great customers who wouldn’t pull the trigger until they felt they were getting a bargain and a number of lousy customers who’s jobs were priced the same way as the bargain seekers and who were okay with the numbers I gave them.
I usually have a gut feeling about potential clients coming out of a first meeting. I think as a sales person or entrepeneur you need to have the ability to size people up quickly. If I could have afforded to, there are jobs that I would have turned down after the first meeting based on gut.
Arbitrarily shooting out numbers that are higher than your competitors, or lower than what you need in order to turn a profit can lead to quick disaster.
This is a great article! We have been wondering if we need to drop our prices on custom cabinetry. After reading this, it has not only given me confidence in our pricing, but also to maybe raise it! Thanks, Carla Granger at Custom Crafted Cabinets & Builders