“But last time your store manager gave me a special discount.”
“Yeah, that’s how he got fired.”
Umm…you don’t want to end up getting the pink slip just because you offered a discount to customers. Neither do you want to lose the customers just because Prospect asks for a discount. Catch 22 situation, isn’t it?
It could be difficult for salespeople to manage discount requests from customers. If you say ‘yes’, then you are losing your profit margin, not negotiating too hard and most probably, lowering the value of your products. On the other hand, if you say ‘no’, then you are likely to lose the deal and also, letting your relationship with customers fall through the cracks.
Well, you have to find a middle ground and a win-win situation when the prospect asks for a discount. This way, customers will feel that they have struck a great bargain while you can ensure that there are negligible or zero dents in your revenues.
Here are effective ways to respond for discount requests.
- Let’s Understand Your Needs and Expectations First
- Is Price the Only Hitch in Purchase?
- If the Product Right Fit, Then Only Talk About Discount
- Discount as a Special Favour, But Not Before Something in Return
- Give Discount, But at Your Terms and Conditions
- Is This a Reasonable Discount?
- Refuse the Discount
Let’s Understand Your Needs and Expectations First
Many prospects tend to ask for a discount right away in the first call or meeting. Obviously, you are at a loss as to how to respond to discount! The best way to deal with discount requests at this stage of the sales funnel is to divert their attention to their needs and expectations for your product, and its alignment with their business goals. You can tell them that the price of your product depends on the prospect’s needs and it is important for you to know the final value of the deal to determine a mutually favourable price.
Is Price the Only Hitch in Purchase?
The customers may have already looked up your prices online or product catalog and are interested in buying the product even before the first call or meeting. When they ask for a discount, it is either because they don’t have a budget to pay the listed price or trying their luck to make the purchase below the normal rate. It is at this point you can question them straightforwardly if the price is the only thing that’s stopping them from buying the product. If their answer is ‘no’, then there is a possibility to sell the product without a discount. If their answer is ‘yes’, then you need to either offer them a product which suits their budget (in case you have a similar product with lesser features and lower price) or bid goodbye to them rather than wasting your resources on further negotiation.
If the Product Right Fit, Then Only Talk About Discount
You have made the product demo or sales presentation and waiting for customer response. Instead of closing or rejecting the deal outright, the customer asks for a discount. It is his way of telling you that a discount can make or mar the deal. But, remember that it also indicates that he is equally interested in buying your product. So, buy some time to negotiate. If you offer a discount immediately, it may lead your prospect to believe if they’ve misjudged your product’s value. So, be little shrewd and maybe drop in a hint that you may consider a discount provided the customer has really found your product the right fit.
Discount as a Special Favour, But Not Before Something in Return
When a prospect asks for a discount, don’t deny it upfront. Try to understand their reasons behind it. If you think that they have a genuine reason such as seasonal working capital crunch, you may want to give them a discount. However, don’t forget to ask something in favour – probably testimonials or referrals.
Give Discount, But at Your Terms and Conditions
Don’t let the customers get the upper hand in the negotiation. Let them know that you can offer discounts only on certain terms and conditions. You can ask them to purchase a premium product or subscription service, extend the contract, purchase a package, increase the number of units or alter the payment terms. If customers agree to your terms and conditions, you won’t lose much profit margin. When its ROI is what you claim, you shouldn’t sell anything that is less than what you expect.
Is This a Reasonable Discount?
Many times, customers will state the exact discount they want. For example, let’s say your product is priced at $20,000 and the customer wants a 10% discount. You need to counter question them whether $20,000 is a steep price or they think that their budget is only $18,000? If they find your product expensive, it would be a good idea to recap the features, benefits and USP of your product, and why it justified the prices. If their budget can’t afford your product, you may want to offer a lesser expensive solution if there is any.
Refuse the Discount
You always have an option to refuse the discount if the deal will yield lower ROI or it’s company policy not to offer any discount. Do it confidently with a bona fide reason. However, do note that it may turn the relationship sour. So, reduce the blow by shifting the focus of customers from price to product to value. Tell them that if they ever change their mind, you would love to have them on your client list. Alternatively, you can offer them a loyalty scheme saying that discounts are available only for customers who are regular buyers.
It is an art to manage discount requests. You must satisfy your prospect’s without destroying your profit margin. If at all you offer discounts, make sure they are standardized or predetermined and you do get something in return!