Everyone is looking for a deal. In fact, discounting is all around us, and most consumers aren’t willing to make a purchase unless they feel they’re getting a great deal. Indeed, not that long ago, McKinsey pointed out: “With inflation at a record high, more people are looking for value; price is at the top of the list of consumers’ motivations for switching.”
Okay, we get the zeitgeist of wanting value for money, and it’s easy to think we should go along with it to clinch the deal and beat the competition. But while offering a discount can clinch a sale in the competitive throes of negotiation, over-reliance on this tactic can ultimately damage your business’s integrity and profitability.
Discounting is a slippery slope. Once you see how easy it is to close on a deal thanks to discounting, you may turn to the tactic more often than you intended – until eventually your customers don’t appreciate it but expect it.
The temptation to give a discount is especially overwhelming if you think you have a stalled sale. But a good salesperson knows not to appear desperate and will hold back from discounting to get a sale.
So, how do you avoid falling down this discount spiral? Here’s what we recommend.
Five Tips to Keep Your Brand Safe from Discounting Price Traps
Long-term success and sustainability are at stake, so take the following strategies to heart to keep your brand safe from the undermining effects of constant discounting.
1. Value Relationships Over Transactions to Avoid the Discounting Trap
When engaging a prospect, it’s obvious you want to make a sale.
But if you shift your focus to building a long-term relationship, the rest will occur naturally. You want to make sure that your potential new client and you are on the same page.
Shift the dialogue from a transactional nature to establishing a partnership. By focusing on quality and alignment in values between the two of you, the other person is less likely to haggle over prices or expect discounts.
2. Give Something Away (Once)
If you give out a freebie only once, you’ll entice your customers without affecting your long-term pricing. For example, if you offer tech services, consider doing a free set-up but maintaining your yearly license fee.
This strategy draws in the customer without devaluing your services in the long term.
3. Avoid Underpricing Yourself
Doing so may allow you to win a client, but is that really a sustainable relationship?
Remember, it’s a marathon not a sprint. If you bring a client on with low rates, they’re always going to expect the low rates. They’ll feel entitled to perpetual bargains and will likely jump ship if you ever decide to raise fees.
If you teach your customers to buy on price alone, it might backfire and they could move to a competitor for a better price.
So – be careful, it’s a trap!
4. Highlight Value, Not Price Discounting
When negotiations focus solely on prices or discounting, the intrinsic value of your service or product can be overshadowed.
For this reason, the discussion should always be about the amazing value and quality service you give or the product you have. You’re doing your brand a disservice when you move the spotlight away from all the great things you have to offer.
Do you really want customers referring you by saying “They have the lowest prices!” rather than “They offer incredible service!”?
So – highlight the unique benefits and superior quality of your offerings to steer the conversation away from discounts and towards added value.
5. Show Clients They Can Trust You
It may seem counterintuitive, but sometimes discounting can breed distrust. If you offer a low price, some clients may understandably be sceptical about whether the price was ever fair to start with!
This scepticism is another aspect that will likely destroy the potential for a long-term and sustainable relationship. You need to build trust through pricing integrity.
360 Consulting Can Help You Avoid Discounting Traps
It may seem like you don’t have many options, but the truth is you must know your worth.
Justify your price, be open with prospects, and follow through! When you do these three things, your clients won’t second guess your offerings. And maintaining this approach will help shift the focus from discounting to the quality and reliability of your service, paving the way for genuine partnerships.
Feel like you need to make some changes to your selling process? We can help! We have decades of experience as VPs Sales in a range of businesses, large and small. Our passion is to help your business grow exponentially.
Learn more about our services here or schedule your free consultation today!