Luckily, there are alternatives to prevent having to result to discounting. Sales Leaders can train reps to be prepared for any situation and redirect the call if discounting is mentioned. While your opportunities may be adamant, by focusing on the value you can redirect the conversation towards a more constructive negotiation. Here are some tips for avoiding discounting at every stage of the sales process.
Design Your Pricing Before the Call
Ideally discounting won’t even be an issue with a strategically designed pricing model. A model based on value metrics means your customers are paying for how much they’re using, such as the number or videos or licenses required. Using value metrics has many benefits:
- Customers are paying for what they need. By aligning your metric with your customer’s needs, they see exactly how much benefit they’re getting.
- It’s easy (and valuable!) to scale up. As your customer sees the value of your product, they can upgrade to a larger plan to get more value. This also increases their LTV and your MRR in the process.
- Customers can start on a lower plan. This way they aren’t paying as much, but they’re also getting less. You’re getting paid for as much as you’re putting in.
Value metrics save you time and effort by making sure you’re getting paid for as much work as you need to put in.
Focus on Value in Early Stage Calls
If an opp is asking for a discount during one of the first phone calls, it’s most likely a way to end the phone call as quickly as possible and stop the selling process cold. The best ways to turn this around are to:
- Focus on the value your product provides for their company. This is why they were interested in your product in the first place and will keep them hooked.
- Emphasize how you can help them. Your product is helping them solve a pain point, and you need to keep the conversation focused on that benefit.
It’s still too early to worry about pricing, so you can leave that for a later conversation. By keeping the conversation focused, you’ll help them realize that the benefits are worth the money.
Deep Dive Into Issues in Late Stage Calls
If discounting is brought up later on in the sales process, that usually means there’s a more serious issue that’s come up. They’ve already made it this far without caring about the price, so something must have changed.
The best way to go about this is to ask questions and figure out why it’s suddenly become an issue. Once you find out the reason, you can devise a way to prove the value of your product to counteract that. Here are a few common reasons discounting is brought up, and ways to work around them:
- They “can’t afford it” or it’s “too much of a risk for the company.” A few hundred, or even a thousand dollars will not make a difference compared to the benefits your product provides. Compare the ROI on your software to their Average Sales Price (ASP) to justify the price rather than bringing it down with discounts.
- They “don’t feel like it’s worth the price.” Of course, you should focus on selling the value of your product but you can also introduce as many non-monetary points of negotiation as possible. These negotiating factors can include a shorter contract agreement, mention of their company in your blog, or concessions on certain contractual terms.
- They “don’t have the last say” or “can’t make the final decision.” Honestly, you shouldn’t even be talking to someone who doesn’t have the final say in the first place. In this case, you need to ask for contact information for someone who can make the final decision and speak with them instead.
After The Discount Is Already Given
What about for the customers that you’ve already given a discount to? Maybe your convincing didn’t work and they were a high-quality opportunity that you just couldn’t lose. Or they’re a long term customer who you discounted in the past, but are now not providing enough returns.
While you can’t increase the price on their current plan, it still is possible to scale them up and increase your negative churn that way. The best ways to do that are:
- Upsell with enhanced features. By providing a “premium” service, such as more interaction or more detailed reports, they will be more willing to pay more for special features.
- Cross-sell with another aspect of your product. As a software company, there is often more than one aspect to your product. Your customers may not even know the full span of the features you offer. If they realize you can help solve more than one pain point, they may be more willing to pay more for more features.
By scaling up your current customers, you can build longer lasting relationships and turn them into loyal customers.