There’s a world of difference between price and deal value. It’s a matter of psychology as much as it is a matter of business. Mostly, though, it’s a matter of the quality of your product or service. Let me explain.
Every sales rep’s heard a customer asking for a better deal. Sometimes, your rep and a competitor are working with the same prospect. That’s when the rep might hear something along the lines of, “So-and-so promised me this price. Beat that price and I’ll go with you.”
99 times out of a hundred, the first thought a rep might have is to drop the price.
While lowering the price might win your rep the deal, a discount isn’t going to do a thing for your company’s bottom line. In fact, I’ll go a step further. Dropping the price is putting your organization at a massive disadvantage. Here’s why.
Confidence and deal value
The moment your rep offers to lower the price on a particular deal, it conveys two things to the client.
- It says that your rep isn’t confident about what he or she is selling. That lack of confidence quickly bleeds over into the customer’s confidence. It’s like saying, “I picked this price out of a hat and, you’re right, this deal is not worth that much.”
- It lowers the value of the product or service. Your price and deal value are two different things. Ideally, you want to offer high value at a premium price. Both should go together if you want your profits to soar.
The right way to handle a discount request
So, how is your rep supposed to act when a customer asks for a lower price? As a sales operations manager, you should be enabling your sales team to sell intelligently.
Intelligent selling means successfully conveying to the customer that what your rep is offering has immense deal value. This will allow the price point to stay where it is.
How can both be accomplished? By using dynamic quoting, offering upgrades, cross-sells, and various product configurations that deliver the most value to the client without sacrificing company profit. One way to go about this is to get out a calculator and figure out which products and services can be bulked together to offer the best value for both the customer and your organization.
A better option is to use a CPQ solution, which will automatically determine the best value for both parties. Your rep will then be able to deliver the information quickly and in real-time, as the sale is going down.
With this capability in place, the next time your sales rep is asked for a better deal, instead of lowering the price, he can raise a finger and say, “Ah, I’ll do you one better.”
And out will come a new sales pitch with even more high-value offerings, making the option of going with your company a no-brainer.
This is known as price optimization, which is now being used by 85% of best-in-class sales organizations.
Using price optimization can single-handedly streamline your team’s understanding of when to be flexible on pricing and when to offer discounts, positioning your organization in a much better environment to thrive.
