In a recent poll I did on LinkedIn, approximately 80% of the people who responded said that discounting was a necessary part of the sales process (although 14% said they felt bad about doing it).
I did the poll because of some dialog I had in one of my LinkedIn Groups about discounting where most of the input seemed to me to be very intellectual and not really grounded. That is not to say there weren’t great insights and comments made about how to show value, differentiate yourself, use ROI properly and more. But most of the input was implying that discounting was a bad practice and bad salesmanship.
I don't want anyone to think that discounting should always be done, no matter the circumstances.
1. If business can be won without doing so, go for it.
2. If you can do all the right things in a sales situation and avoid discounting, do so.
3. If you can add value vs. discount, go for it.
4. If discounting sets a bad precedent for future business, than avoid it.
What got me though was the dogma of never discounting.
So why do people discount or feel it is OK to do so? Because:
1. the prospect is expecting it because of the competitive nature of the business
2. the company a salesperson works for expects it to close business
3. revenue is the key element vs. profit
4. it meets a salesperson’s individual needs or goals
5. it is part of an overall margin and profit plan and the margin comes from elsewhere
6. there is plenty of margin built into a product and it is an intentional part of the sales process
7. it is a way of gaining market share and getting margins from other items
8. to make up or thank a customer for their loyalty
9. it allows you to be more productive by potentially shortening sales cycles or only applying to companies that are appealing or unappealing geographically
10. you are offering a new service or a new product (look at all the stuff you can get for free on the internet. If that isn’t "discounting," what is it?
I would love to know your thoughts about discounting.