Offering discounts when asked, or refusing flat out, might not be the best way to respond. By asking the right questions, however, you can gain valuable insight into why the customer is seeking a discount, and thus have ammunition that helps preserve your profits.
For example, when asked for a discount, you might start the conversion by saying: “Before I respond, would you mind if I ask a few questions so I can better understand your request?” Then consider asking these follow-up questions, depending on the circumstances:
To dig deeper: “Occasionally a client requests a discount, and I find I am able to be more helpful if I understand why they’re asking for one. Can you tell me why you think the price is too high and a reduction is warranted?”
To size up your competition: “I know you are talking to others about this project. Do you feel my price is dramatically out of line with the market?”
To say “no” but still identify items to negotiate: “I’m able to reduce the price when the scope and breadth of the proposal are also cut back. Would you like me to prepare an option for you that would do that?”
To highlight the value you are offering and clarify what’s most important to the customer: “I’m not sure we had a thorough discussion about the benefits you expect from this. Can we review those, as you see them?” Or you might ask, “What parts of this proposal are most important to you? Which aspects of it do you find less valuable?”
To differentiate yourself from the competition: “Would you mind if I briefly review the benefits of what we are selling that I think represent value above and beyond what our competitors offer? I’m not sure I articulated these very well.”
To tie your proposal to a customer’s higher-level goals: “Can we review one more time what your goals are here? What are you hoping to accomplish?”
Throughout this process, the goal is to preserve and strengthen the customer relationship – assuming it’s a customer you’d like to keep. If you’ve priced your product or services properly, you might not be able to afford a discount. But if you simply say no the customer might leave and never return.
By using a question approach, you can delve deeper into the situation and discover the customer’s true needs. You might find another way to show them the value they want. In the long term that will be viewed more positively than a one-time discount and is a better option than refusing out of hand.
Countering the Culture of Free
“Free” is an even more powerful force in the marketplace than “discount” – especially online. More and more customers expect to get things for free. As with discounts, the key here is to understand your customers and focus on delivering value.
Here are three ways you can innovate around pricing and perhaps prevent discount and freebie questions from arising in the first place:
Pricing innovation: It’s not just about “how much” but also “when” the customer pays that counts. Think about the point (or points) in time when you require customers to pay. Successful approaches include: subscription plans, variable pricing, by-parts pricing, bundling and rental models.
Payer innovation: Sometimes the customer who pays is not the consumer of the product. The trick is to think of third parties who might pick up the tab, or part of it. A classic example is broadcast TV. It’s free to you – the advertisers pay. Sponsorships and white-labeling are other examples. White labeling allows product companies to sell outside of their traditional market without having to drum up demand themselves.
Package Innovation: Don’t take “package” too literally. It’s not about the wrapper; it’s about the benefits and features of a given product or service. Today’s most innovative companies are expanding revenue opportunities by changing the form an existing product takes. There are three basic ways to think about it: Breaking the product down into components, integrating different pieces of the value proposition, and extending value in new ways.
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