One of the most delicate phases of any negotiation, and one feared by many salespeople, is naming the price. We have already devoted an article to price strategies and the price-seller relationship, but given the interest the topic arouses, today we want to analyze how to handle discount.
No, I won’t buy it for 100 euros! But if you took something off the price …
What should you do if your customer adopts such an attitude? Perhaps give in immediately and say ‘okay, you can have it for 80 euros instead of 100’, thus devaluating your offer or even giving the impression that the initial price was overinflated? The situation is tricky: we all know purchasing staff who have been trained to get the best price and, more generally, that there are a lot of people out there who see getting a discount as a challenge directly linked to their pride and personal prestige. What follows are some suggestions on how to best manage customer requests for a lower price.
Sell the value, not the price
To manage any discount request serenely and safely, you need to have prepared a sound basis for the negotiation; specifically, you have to present the price effectively by anchoring it to the value of your offer. In practice, this means presenting the product/service clearly by explaining what benefits it will bring to the customer as well as using the purchase motivations that emerged in the analysis phase as leverage (take another look at the post ‘The salesperson and the price’). The unconscious fear of missing a sale may lead the more insecure salesperson to immediately crumbling when faced with a request for a discount. Such a response leads to three outcomes: a lower profit margin that will be difficult to recover with subsequent sales, a lowering of the value perceived by the customer and, more generally, a weakening of the relationship.
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If you only convince your customers to make a purchase thanks to a discount, they will easily switch to another salesperson who gives them a bigger discount.
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The right question to ask, therefore, is, ‘how can I maintain the value intact and ensure a satisfied customer?’ Rather than bringing the price down, consider if there is anything extra that you can give the customer (services, accessories, quantity, time, etc.) which will enable them to perceive an increase in value.
Manage the discount through exchange
Despite the above, there may be situations in which it is useful to grant a discount. If, for example, the customer does not physically have that amount of money to spend or if a purchasing manager is not delegated to go beyond a certain budget, then it would be acceptable to quote a discounted price. In this case, how does the value remain intact? The solution is to introduce reciprocity: ask yourself ‘what can I get in exchange for my discount?’
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The discount will, therefore, be linked to an action by the customer such as advance payment, the purchase of a larger quantity or the signing of a long-term supply agreement.
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Alternatively, the customer could receive more favourable economic conditions if he/she confirms the purchase by a certain date. However, you should underline the exceptional and exclusive nature of this offer. As Robert Cialdini reminds us in his book The Psychology of Persuasion, opportunities seem more desirable when their availability is limited. When a discount is granted, it must be appropriately valued to avoid the risk of reducing the quality of the relationship with your customer through weakening the element of trust.
The first sale
Be careful not to fall into the trap set by some unethical customers: ‘Give me a cut-price for this first delivery, then if we’re happy there will be lots of work for you’. Starting with a low rate in the hope that you can raise it later is bound to be an illusion.
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Once you have sold your product /service below the standard price, it will be difficult – if not impossible – to bring the price back to the desired level.
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When it is time to make the next purchase of the customer will ask, ‘Why should I pay more than you charged me last time?’ Basing your relationship on solid foundations is the best way to maintain trust and continue the relationship over time. Loyalty and word of mouth are, in fact, connected to value and not to discount: a customer who only bought your offer because of advantageous economic conditions will be less loyal.
Your price list has to be aligned with the real value of your offer. If, however, having exercised all your skills to the best of your ability, your interlocutor continues to insist ‘take a bit more off!’ perhaps the time has come to accept that this customer will not be ‘your’ customer. Sales is an exchange of value, based on mutual ethics, trust and respect: if the right conditions do not exist, it would be mistaken and worthless to create them artificially.
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