Selling

Instead of Discounting, Back Some Value Out of Your Proposal – Part 2

By Dave Stein
August 13, 2013

– Continued from last week’s post on how to avoid discounting and when it may be appropriate –

You know your competition is going to come in with a substantial discount, as they have before. Your sales effort must include:

• Assuring yourself that the customer is not making a decision solely or primarily on price. This question must be asked again and again of key decision makers throughout the process.

• Getting agreement from the “real buyer” that you understand their business objectives and that your offering can help them achieve those objectives. This method does not work unless you are dealing with the real buyer.

• Finding unique areas of additional value (on top of their existing requirements) that you can provide through the capabilities of your product or service offering.

• Management support for potentially selling part of your offering now and the rest later on, rather than selling the whole thing at a discounted price.

In cases where you know your competitors will be discounting, you’ll need to offer several investment options to your customer. Alan Weiss, “the consultant’s consultant,” suggests providing three opportunities for them to say yes. If you offer your prospect three options to buy—let’s say for the sake of labels, Platinum, Gold, and Silver—and you’ve done a good job of selling the business value of your offering—you can avoid having to concede more than a nominal discount.

3option

Your plan here should be not to discount, but rather to back value out of your proposal to meet the prospect’s desired investment level. Presenting three options lets you do exactly that.  The customer gets to determine how much they want to invest and will enjoy the resulting ROI associated with that level of investment.  Be advised that to do this most effectively, you’ll need some political, financial, and competitive selling skills.

Here is a template for the three options:

The Platinum OptionPlatinum

• Gets the customer what they need (and want)

• Highest level of investment.  You might ask for a 10-30% premium over the Gold level for this option, depending on the value you believe you can deliver to the customer.

• All the features, modules, components, capabilities available

• Your best resources

• Quickest time to value

• Priority service: As examples, a special 800 number (like the airline priority clubs), top of the queue, 24 x 7 x 365

• The highest ROI (see graphic)

• Other perks, such as quarterly meetings with your CEO, special invitation events, input into your product development plans

The Gold OptionGold

• Gets the customer all of what they need (and a few wants)

• Budgeted level of investment. This is aimed right at the prospect’s budget level.

• Most/many of the features, modules, components, capabilities

• Proven, talented and dependable resources

• Quick time to value

• An attractive ROI

• Other perks, such as quarterly meetings with your VP of Service, special invitation events

When your prospect tells you your competition has come in with a very low price, you can calmly discuss with them the fact that they have an option (the Silver option) that will provide them with what they need at a competitive price. You will already have differentiated yourself from the competition in a number of areas: understanding the customer’s business, industry, opportunities, challenges, competitive and customer pressures, and built rapport with the real buyer. In addition, you’ve professionally educated your prospect on the risks that befall companies who depend on tactical discounting to win.

The Silver OptionSilver

• Gets the customer most of what they need now, and the rest in “phase two,” next quarter or next year, for example

• The lowest level of investment, aimed 10-30% below the Gold level, depending on how severe a discount the competition is going to offer

• Some of your total array of features, modules, components, capabilities.  The rest can be acquired later.

• Talented and dependable resources

• Reasonable time to value

• An ROI that meets their corporate requirements

What will the customer do? The may tell you they want your Platinum option at the Silver price. If you’ve done an effective job selling the business value of your product or service and built a relationship with the real buyer based upon trust, you can look them in the eye and tell them it just isn’t possible. What will they do then? According to our clients, more often than not, the customer will go for the Gold or Platinum option.

© 2013 — Dave Stein — All Rights Reserved

Dave Stein, CEO and Founder, ES Research Group, Inc.

http://davesteinsblog.esresearch.com

Photo credit: © Olena Pantiukh – Fotolia.com

  • discount , High Discounts , options , value , Vendavo Profit Advisor

    Dave Stein

    After an early career as a professional trumpeter, Dave Stein has held many diversified technical, sales and executive positions: programmer, systems engineer, sales representative, sales manager, director of worldwide sales development, VP of sales, VP of international operations (based in Europe), VP of client services and VP of strategic alliances. In 1997 Dave founded the sales consultancy, The Stein Advantage, Inc., which provided expertise and assistance to their clients in hiring top sales professionals, gaining more effective positioning in the eyes of industry analysts and developing corporate and selling strategies to overcome tough competitors. In 2005, along with former president of Gartner Research, N. Adam Rin, Dave founded ES Research Group, Inc. Dave is quoted in leading business magazines and websites, including Fast Company, The New York Times, BusinessWeek, Inc., U.S.A. Today, Fortune, and Forbes. He is also the featured columnist on sales training for Sales and Marketing Management magazine. In addition, he wrote the Amazon best-selling How Winners Sell. Dave is Adjunct Professor of Sales and Sales Management at the Dublin Institute of Technology.