Don’t back down when customers want a discount
When was the last time you told a customer “No” when they asked you to discount? And how often are you prepared to walk away from a prospect when they ask for more than you are normally prepared to do? If you’re like many sales people, your answers might be, “Not often enough.”
I just finished a consulting contract with a firm that truly understood the value I was providing. At the end of the day, what they received from me to help their business and to grow their sales far exceeded the costs associated with my work. Unfortunately, not enough customers think this way. Shortly after this consulting contract was completed, I was feeling good about this very successful project when my phone rang. It was a prospect whom, for about 18 months, I tried getting their business. In those past months, we had several phone conversations, a personal visit, I sent two quotes, and even visited their new (at the time) IT guy to discuss the technical impacts of the work they wanted me to do.
In every case, all they seemed to be interested in was what my price would be. Sure, they spoke about how they needed an expert’s help with improving their existing system, how their people needed quality training, and how they weren’t getting a good return on their investments. But when it came right down to it, all they really cared about was what it would cost them to fix their problems, instead of what it was costing them NOT to fix their problems. So I gave up on this prospect a long time ago because they were wasting valuable time and going nowhere.
So when he called me after all this time, the first thing out of this guy’s mouth (it was their IT guy) is how they realized that they REALLY do need help and that they’ve been wasting time and money with the way things were going. Mind you, this is months after our last conversation, which was about discounts, and nearly 18 months since our first encounter. Now I can’t say that my services are cheap. I’m not over-priced, but I am not cheap. I typically charge by project, which has an inherent value as defined by my client’s needs, and this works well for most of my clients. Needless to say, when I told him how much I would charge for what he described, he immediately asked if I would offer any kind of a discount, again!
My response to him was as follows, “Look, I know my price is high. But my value is higher. And I already explained in detail what value I will deliver to your company based on the needs you described. To what good is your system and processes if they are not delivering what you need to increase sales and sustain growth? How valuable will it be for you to learn how to develop and implement a strategy that will make full use of systems and resources you already have in place and have already invested in, yet have not fully exploited? I do not discount and never will. My value is too high and you will not respect me if I did discount. I’m not a mechanic or technician that gets paid by the hour to fix a specific broken part. And besides, if I discount for you without anything in return, then word will get out and everyone will want me to discount, which would be disastrous. Now, if you’d like to pay less than I quoted you, then we can negotiate by discussing something of less value, such as a smaller project.”
He said he understood, respected and agreed with what I said and that he will have to discuss this with his management and they will probably want to call me to discuss this further. To that I added, “With all due respect, please tell your management that if they wish to call me to try to get a discount, even though they are fully aware of the value of what I am offering, then not to bother calling me back since I am not interested in having such a discussion.” I know exactly what would happen if I did give them a discount on this initial deal. They’d expect a discount forever, and each time they’d try to get an even bigger discount than the last. It’s just not worth discounting in this situation.
Fortunately, I’ve only had this sort of discussion about once a year for the past several years since not many of my prospects behave this way. I don’t like having to say these things. But when your prospect doesn’t appreciate what you have to offer and refuses to understand that they will get more out of this than you will and that there is a value to what you are offering, then it has to be done. Well, guess what happened to this prospect? Nothing. That’s right, absolutely nothing since they never called me back. And I’m happy with that because this sort of negotiation (if you even want to call it that) is a total waste of time. I have too many other prospects who understand the value of my services and, if anything, will enter into a reasonable negotiation where we both come out as winners. But one should never enter into a win-lose situation, regardless who the loser is (and in this case, it would have been me!). It’s better to walk away.
Some times, we just have to say “No” and walk away from a prospect. You do have this choice in sales. You have to focus your time and efforts on those prospects that want to have a positive, non-abusive relationship with you where you both come out as winners. If you can choose who your customers are, life will be more fun because, quite frankly, you will work with fewer jerks. And best of all, you’ll be more profitable and your clients much happier.