Discounting is not a viable prospecting strategy! If you think you can fill your pipeline and create great customers with a low price, you’re setting yourself up for failure. Go ahead and cut your price and go ahead and tell yourself you will do it just this one time. Liar! There is never just one time! Once you cut your price to close a deal, you’ll find yourself doing it time and time again. Even worse, the customers who you give the lower price to will expect the lower price the next time they buy.
Watch this to get the inside scoop:
Congratulations goes out to your customers who did pay full price; you just turned them into suckers. Nice job! Get yourself the t-shirt, the discounted one! With each discounted price you give, you are saying you don’t need the profit. The 10% reduction in price may very well end up being a 40% reduction in profit. Would you take a 40% pay reduction to close a deal? Case closed.
You might be thinking this doesn’t apply to you because you see yourself as not being a high-priced option. It doesn’t matter what your price point, when you cut your price to prospect, you will attract a lower level customer. Your price signifies the quality you create and your value proposition. Reducing your price to fill your pipeline tells people you’re not worth the quality you charge. As a result, you’ll have two problems. First, you will attract customers who only buy from you based on price. Second, if you change the price or someone offers a lower price, they’ll leave.
Too many companies and salespeople think that the key to sales is by offering a discount. Here’s the problem with that: price cutting becomes a drug that you become addicted to very quickly. As a result, you’re selling the discount and not the value of what you have to offer. Don’t think what you sell is different or your customers are special and the only way to reach them is with a discount. False!
Anyone can increase sales if they cut their price enough. Hey, why not give prospects a really big discount, and just say it’s free! Why hold back? It’s a simple economic principle that says there is a consistent correlation between demand and price. If you lower the price, you will increase the demand. It’s that simple; however, it leaves out one basic item: your profit.
Your focus needs to be on selling the value, not the discounted price. This is why I say that you can’t take a Walmart shopper and turn them into a Nordstrom customer. A key reason why people shop at Walmart is because of their low prices. For Nordstrom customers, it’s about the quality and the expectations they receive from what they buy.
Your price helps to create the value of your proposition. If you buy something for a very low price, you won’t expect much from it because you know the reason you bought it was because it was cheap. Conversely, if you pay more money for a product, you expect more for it. Your price sets the expectations the customer has and when you discount the first sale, you have now altered the value model for the customer.
Prospecting is not about price. Prospecting is about uncovering needs and creating a value proposition. When you sell the customer because of your low price, don’t be surprised when the customer leaves you because someone else has offered an even lower price. Low-price is not a sustainable competitive advantage. Someone will always come along and offer an even lower price.
Copyright 2019, Mark Hunter “The Sales Hunter” Sales Motivation Blog. Mark Hunter is the author of High-Profit Prospecting: Powerful Strategies to Find the Best Leads and Drive Breakthrough Sales Result
