eBusiness Weekly
The recently ended Agricultural Show of 2019 was characterised by a number of exhibitors who had some form of a product or service to offer tied with sweet discounts for the visitors.
It got me thinking that how do you as a business owner respond to a customer when they probe for a discount at an exhibition or a regular sales call engagement? For this week our topic of discussion is on how you respond to a discount proposal from a prospect.
A discount can help accelerate a slow-moving deal, create goodwill, and give you leverage for requesting concessions.
However, you’ll only reap these benefits by discounting strategically, not whenever your prospect asks for one.
Promising your prospect a discount before the actual negotiation can have three negative consequences:
- The buyer subconsciously attributes less value to you and your product. After all, if its ROI is what you claim, why are you so willing to sell it for less?
- The focus shifts from value to price. Instead of talking and thinking about your product’s potential impact on their business, the prospect is thinking about how much it costs.
- You lose some of your bargaining power. Successful negotiations require a give-and-take approach.
If you offer a discount in the beginning stages of the sales process, you’ll miss the opportunity to ask for something in return because you don’t yet know what your prospect wants. That sets a dangerous precedent of one-way concessions. When the time comes to put together the actual agreement, the buyer will be accustomed to getting what they ask for without giving anything up. Of course, responding to discount inquiries during the actual negotiation is challenging too. You must satisfy your prospect’s expectations without destroying your profit margin.
During the initial call
- “Before we discuss discounting, let’s figure out what you’re looking for in an offering. That will allow me to give you a far more accurate estimate.”
If the price of your product or service largely depends on the individual prospect’s needs, goals, and situation, it’s too early to discuss discounts.
Without knowing the final value of the deal, you can’t determine a rate that will both satisfy them and keep you in business. Brushing off the prospect’s question will make you seem more interested in your agenda than their own.
Instead, acknowledge them and explain why it’s mutually beneficial to table this discussion until later.
- “Do you see price being a major obstacle to this purchase?”
To be frank, there are some objections that can’t be overcome. If your prospect’s request comes right after they’ve asked for pricing information or your prices are available online, it’s possible they do not have the budget to purchase your product at full price. They’re trying to learn whether you’ll consider a discount. Say no, and they’ll likely walk away.
Alternatively, they might be capable of paying the normal rate, however, but interested in getting a discount if they can.
This question helps you figure out the buyer’s motivations. If they respond that price won’t be an issue. If they say it is, delve deeper into their financial situation. You might need to disqualify them if your product is too far out of his reach.
- “We can definitely have a conversation about specific numbers, but let’s make sure we’re on the same page about this solution being a good fit for your needs.”
At this stage of the sales conversation, a discount request usually indicates the prospect’s desire to buy. Since they agreed to a demo or presentation, they’re clearly interested in the product; now they’re thinking about the details of the purchase.
However, don’t promise them a discount just yet. Automatically granting their request will make you seem overly eager to close, which will work against you during the actual negotiation. It may also lead your prospect to wonder if they’ve misjudged your product’s value. You are not saying a discount is off the table, rather you’re reminding the prospect it’s not relevant until you’re both certain there’s mutual fit.
Negotiation
- “I can offer you a discount if we (extend the contract, adjust the terms of payment, go with X package or tier, register Y seats).”
Compromise is essential to most negotiations. By offering a quid pro quo discount, both you and the buyer will come out ahead. It’s a good idea to walk into the discussion with several non-monetary requests, which will help you open up the negotiating possibilities beyond price.
- “What would be a reasonable discount?”
Using the prospect’s response to turn the question around for a discount has always got the job done.
If your product is $10 000 and the buyer says she would like a 15 percent discount, ask, “Are you saying you think $10 000 is too expensive for the product or you don’t want to spend more than $8 500?”
This reveals whether they’re not sold on the true value of your product or simply can’t afford it. If it’s the latter, offer them a reduced or less comprehensive option.
- “What would need to happen to make our offering worth the price I quoted you?”
When a prospect pushes back on price, it’s possible they don’t have the budget for your product/service. It’s also possible you simply haven’t done a good enough job of selling it.
By asking: “What would need to happen to make our offering more valuable to you?” You can uncover gaps in the case you’ve made and identify objections that might still exist. It allows you to add or argue value for your offering and if you meet the needs outlined by your prospect to earn full price.
- “Would a month-to-month plan be enough to get you to close today?”
You may not be able to offer this. But month to month plans can be a great way to get prospects to close without discounting your product/service. Month-to-month plans are usually easier for prospects to get approved than annual contracts. If you believe this prospect is a great fit for your solution, a month to month contract shouldn’t scare you.
Instead, you get the chance to prove your value to your prospect turned customer and earn the annual contract or the cross-sell or upsell in the future.
- “What if we connect next quarter? Do you think you’d have more budget open up then?”
Sometimes your solution is just not in the cards for a prospect’s budget. Hopefully, you’ve discovered this early in the buyer’s journey, before you’ve devoted too much time to trying to close them now.
Make sure you’ve exhausted all opportunities to work with a prospect who’s really enthusiastic about your offer. But, if the budget just isn’t there, you can gently ask this question to lead both parties into the best option at the moment.
The views given herein are solely for information purposes; they are guidelines and suggestions and are not guaranteed to work in any particular way.
Robert Gonye is a Business Growth Expert and Influencer. He writes in his personal capacity. Comments and views: [email protected]. twitter@robert_gonye
