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- 🚫 The Death Spiral of Discounting: Why It's Time to Break Free 🚫
🚫 The Death Spiral of Discounting: Why It's Time to Break Free 🚫
discount your value at your own risk!
Welcome to this week's edition of IGNITE Sales, where we dive deep into the world of sales strategies and value-based selling.
Our feature article tackles the burning question: Is discounting a necessary evil, or is it silently eroding your profits? Join us as we explore 'The Death Spiral of Discounting' and why it's time to break free from this costly trap.
Section 1: 'The Death Spiral of Discounting'
💡 Section 2: Make it Real: Questions to Help You Navigate Discount Pressure
🧠 Section 3: The Power of Neuroscience to Help You Sell Value
📚 Section 4: Read more: Some of my favorite resources
In the fast-paced world of sales, it's no secret that the allure of discounts can be incredibly tempting. 🤑 After all, who doesn't want to close deals quickly and make customers happy, right? But what if I told you that constantly giving in to discount requests could be a trap, a relentless spiral that could ultimately harm your business? Let's dive into the dark side of discounts and explore why it's time to break free.
The Discounting Dilemma
Discounts, when used sparingly and strategically, can be powerful tools. They can seal the deal and make customers feel valued. However, here's the catch – the more you rely on discounts, the more you erode your profit margins. 📉 It's a slippery slope that can lead to a cycle of dependency.
You have to work harder to erode systematic discounts
💪 Selling on Value, Not Discounts 💪
So, what's the solution? It's simple – sell on value, not discounts. 💡 Instead of caving in at every discount request, empower your sales team to emphasize the unique value your product or service brings to the table. It's about showcasing what sets you apart from the competition.
Handling Discount Requests Like a Pro
When buyers ask for discounts, don't panic. 🙅♂️ Instead, view it as an opportunity to engage in a meaningful conversation. Understand their needs and concerns, and demonstrate how your offering aligns perfectly with their goals. Sometimes, a well-articulated value proposition can make a discount request fade into the background.
Walking Away from Bad Deals
Not all deals are created equal. Some can be more trouble than they're worth. 💼 It's crucial to teach your sales team when to walk away from unprofitable or mismatched opportunities. Remember, your time and resources are valuable – invest them wisely.
I called discounting the death spiral because your quota attainment may not recover from this practice. Here’s what a death spiral looks like. When I was in pilot training, it is required for every pilot to learn how to recover from a spin so it doesn’t become a death spiral. The pic doesn’t do it justice, so here is a video showing you (caution: language). It’s a rather descriptive look at what can happen. I recall one year when my team of 10 sellers discounted an entire territory’s annual quota. We still made our number, but the odds were stacked against us.
Accentuating Your Value Proposition
Highlight your unique selling points. 🌟 Showcase how your product or service addresses pain points, streamlines processes, or delivers exceptional results. Doing so will naturally shift the conversation away from discounts towards the inherent value you provide.
🚀 Igniting Success in Sales 🚀
In short, discounting may seem like an easy way out, but it often leads to a downward spiral that can cripple your profits. Instead, let's challenge ourselves and our sales teams to sell on value, respond strategically to discount requests, and have the courage to walk away from deals that don't align with our business goals. By doing so, we can ignite success in sales that goes beyond short-term gains. 💪
Making It Real
Whoever asks the questions is in control. Do get knocked on your heels with a discount request. Probe more and ask why.
When the heat is on, and your prospects or customers press for discounts, it's time to shift the conversation toward value. Here are some key questions to keep in your arsenal:
"Can you help me understand your specific needs?" 🤔
Start by digging deep into their requirements. Understanding their pain points and goals is the first step in demonstrating value.
"What outcomes are you looking to achieve with our product/service?" 🎯
This question redirects the focus from price to results. It helps you emphasize how your offering can deliver the desired outcomes.
"Have you explored all the features and benefits of our product/service?" 🚀
Encourage them to explore the full scope of what you offer. Often, customers may not be aware of your product's value.
"How does our solution compare to your current alternatives?" 🤝
This question prompts a comparative analysis. It allows you to highlight your competitive advantages and unique value.
"Are there any specific challenges or concerns you'd like us to address?" 🤨
Acknowledging and addressing concerns can be more impactful than offering discounts. It shows your commitment to customer satisfaction.
"What budget constraints are you working with?" 💰
Understanding their budget constraints can lead to creative solutions, such as custom packages or payment plans.
"Can we explore a longer-term partnership to maximize value?" 🤝
Suggesting a long-term commitment can shift the conversation towards value over time rather than immediate discounts.
"Would you be open to a pilot program or trial to experience our solution firsthand?" 📊
Offering a trial allows prospects to see the value for themselves before discussing price adjustments.
"Are there any additional services or support you'd like to add to enhance your experience?" 🌟
Sometimes, upselling additional services or support can justify the overall investment.
"How important is quality and reliability in your decision-making process?" ⭐
This question underscores the importance of quality and reliability, which can often outweigh price considerations.
Making It Real” The Power of Anchoring and Setting a Range in Negotiations
In the world of negotiations, anchoring is a psychological phenomenon that can be harnessed to influence the outcome in your favor. It involves introducing an initial reference point, or "anchor," which serves as a starting point for the negotiation. Here's how it works and what neuroscience reveals about this technique:
Anchoring in Action 🎯:
When you initiate a negotiation, your first number or proposal becomes the anchor. It serves as a reference point that significantly influences the final agreement.
The Neuroscience Behind Anchoring 🧠:
Neuroscience research shows that our brains tend to rely heavily on the first piece of information we receive when making decisions. This initial data becomes a mental reference point, shaping our perception of subsequent information.
Setting a Range of Options 📈:
Rather than presenting a single price, consider offering a range of options. For example, you might present a premium package, a standard package, and a basic package. This approach leverages anchoring while providing flexibility.
What do you think the anchor is here? The middle option anchors you between two others. Terms like Premium, Elite, or “For our best customers” make the offer seem special, especially since no one wants to be Basic or Standard.
The Power of Compromise ✅:
Presenting a range allows the other party to feel a sense of control and choice. They can evaluate options and are more likely to perceive your middle-tier offer as reasonable, even if it was your intended target.
The Neuroscience of Decision-Making 🤔:
Neuroscience studies have revealed that the brain experiences cognitive dissonance when presented with choices. This discomfort can push individuals toward the middle option, which often aligns with your target price.
Framing and Context Matter 🖼️:
How you present the range matters. Provide compelling reasons for each option, highlighting the unique value of the middle choice. This framing reinforces the perception of value.
Creating Mutually Beneficial Agreements 🤝:
The power of anchoring and setting a range lies in its ability to lead to win-win outcomes. You achieve your desired value, and the other party feels they made an informed choice.
Here are some of my favorite resources to help you:
$100M Offers - Alex Hormozi
Here’s an article from Dan Kennedy, one of my favorite copywriters. His No BS Price Strategy is another great read, or you can check out this summary in Entrepreneur Magazine.
I’m sharing the Audible because I listen to it repeatedly - it’s a classic. I got to meet Dan and some of his friends. It helped serve as a foundation for my sales execution.
In my 90-day Sales Transformation, SPARK, we've dedicated an interactive week to the art of crafting your compelling sales messaging and offers. Leveraging my extensive digital sales and marketing knowledge, this module is designed specifically for sales and marketing teams. It's your opportunity to fine-tune your value proposition and ignite the SPARK you need to supercharge your sales efforts. Launching October 16th.
How was this week's edition?