Ah, the sales discount. An age-old tool that sales teams have been using for eons to help drive client growth and revenues.
For at least that long, sales reps have grappled with how to make discounts work for them. Discount too far, and you're hurting your company's bottom line. Don't bend far enough, and your competitors stand a chance of snatching your prospects out from under you.
In an age of big data, where it's possible to tell if a customer will buy your pitch by simply evaluating some analytics, is something as "old-fashioned" and personal as a discount negotiation still relevant?
Discounting for Sales Success
Discounts are one of the most powerful tools available to help nudge a prospect over the threshold into full-fledged customer status. When it comes to existing customers, there are few ways to better nurture that relationship than by rewarding their patronage with a well-timed discount.
A prospect's perception of your pitch has as much to do with your pricing plan as it does with the effectiveness of the products themselves. Making yourself competitive on both fronts goes a long way in keeping you top of mind when they finally make their decision.
Discounts help you break into new markets, shaking up the old paradigm and generating noise for your brand. Among demographics that highly prioritize value, such as small and medium businesses, offering an introductory discount can build brand loyalty.
Not All Discounts Are Created Equal
You don't have to take a rigid approach to discounts. Besides introductory discounts, offers like free trials and product demos help build consumer confidence in your product, while helping you get a foot in the door. Take advantage of periods like tax season or the holiday rush to offer time-sensitive discounts, and make the most of your trade show appearances by providing special event-specific offers.
When a prospect or customer demands a steep discount to close the sale, it can be tempting to concede. Granting standard discounts for all your leads can appear like an easy way to generate sales. But undercutting your own company to meet quotas can backfire by eating into revenues. Discounts, after all, are investments, and investments that cost more than their worth should be scrapped.
Instead, doling out discounts based on the value created by customer behavior can themselves create value in the long run. For example, encouraging customers to purchase higher-margin products or having them refer you to other businesses are profitable activities that merit discounts.
While there's no hard and fast rule on when you should offer a discount and how low you should go, a great rule of thumb is not to give up more than you stand to gain.