Of course your goal is to have buyers make their decisions based on value, not just price. And you’ve put time and effort into creating and communicating a value proposition that doesn’t depend on low, low pricing.
But let’s get real. In today’s cutthroat environment, you’re still likely to face competitors who have come to depend on last-minute deep discounting as a default sales strategy.
And you’re still likely to face one or more buyers who insist – despite your value prop – that they just can’t say yes unless you can, ahem, do something about the price.
Sure, sometimes discounting may be appropriate – e.g., as a token concession to close a deal. And if you have “dealing room” it may be better to get the deal signed than lose it on principle.
But if you’re simply being asked to match someone else’s discount, there’s a better approach.
A common scenario
Let’s assume you’ve been working with Acme Fireworks & Storm Door and your arch-rival, Wiley Coyote, is going to offer a significant discount, the way he always does.
As part of your sales process you have done everything right so far:
- Made sure the buyer is not going to be deciding based on price alone. You want to be asking this question over and over of the decision makers as part of the sales process.
- Understood not only Acme’s immediate problem but its longer-term business goals – and how your solution can help with both.
Found ways your product or service can add value beyond the basic requirements.
Gold, silver or bronze
Once you’ve sold the business value of your solution, you can avoid discounting by offering three different opportunities for buyers to nod their heads and invest in it.
You could call these levels Gold, Silver and Bronze (or Super, Premium and Regular, for that matter; you get the idea).
Whatever names you choose, the idea is to remove value from your offering as you descend the levels, so that it matches the customer’s preferred level of investment.
Think of it as a way to unbundle, and test, the value of the various components of your offer.
The buyer may tell you that everything is valuable. She may even believe it. But the true test is whether, or how much, she’s willing to pay.
By offering different combinations, you can fine-tune your offer to deliver the right combination of value and price for each buyer – without simply shoveling out concessions.
Here’s what each level might contain (of course adapted to your situation):
The Gold level – needs and wants
This is the highest level of investment, which delivers not only what the buyer needs, but also what they want.
This level should include your best resources, the fastest payoff and the highest ROI you can realistically forecast.
To sweeten the deal, you might arrange for priority service, such as 24/7 service access; include a given number of hours of consulting; and offer special “Gold Circle” customer events, or access to your design team.
The Gold level might be priced above the customer’s expected budget level. That’s okay. Buyers can quickly tell you whether such extras are worth, say, 10% to 30% more. Either way, it’s their choice.
The Silver level – needs and some wants
The Silver level option packages everything the buyer needs, with some “wants” for good measure. It’s priced directly at their budget level.
The strategy for the Silver Package is to charge a competitive price for what the customer needs, and include a few “perks” that don’t add much to your costs – for example, ongoing customer support or help with implementation.
When buyers counter that Wiley Coyote has a lower price, you can review with them all that the Silver level offers, at a competitive price tailored to their established budget.
The Bronze level – present needs only
The third path to a “yes” is the Bronze level, which provides what the buyer needs now, but defers the remainder to a future date.
This level might be priced up to 30% under the Silver level, roughly matched to the discount you expect Wiley to offer.
Of course, some customers may want to pay the Bronze price and still get Gold. But since you’ve already demonstrated business value, you can stand your ground. You’ve given the buyer three good options – and a way for both of you to meet your objectives.
Source: Adapted from an article by Dave Stein. at http://davesteinsblog.esresearch.com
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