Discounting has reached Pandemic levels. It used to be something we used as a last resort, and only under extreme duress. Today, responding to a prospecting call earns a discount. Proposals come with a price and then either an automatically applied discount, or hints at a discount. Something like, “Buy by the end of the month and I can discount 15%!”
Forget the adverse revenue impact. Discounting is a demonstration in our own lack of confidence in the value we create with our solutions!
Stated differently, it’s like shouting to our customers, “We don’t believe in our solutions strongly enough to defend the value they offer!”
If we don’t believe in the value of our solutions, if we are unable to communicate and defend that value, then why should our customers believe that we create the value we claim?
How can we even utter the words, “Value Proposition,” when we have preceded those words, “I’m sure we can work something out in the pricing…… (wink, wink)….”
It brings up key questions within our own organizations:
- Do our solutions create real value for our customers?
- Do we understand that value….and believe it?
- Do we know how to communicate that value in terms relevant to the customer?
- Can we defend that value compared to competition, compared to other alternatives, compared to Doing Nothing!?
- Do we really deliver on the value we claim?
The price we charge has little to do with the value we should be creating. In most cases, this cost is the smallest part of the reasons customers should be buying. But too often, that’s what sales focuses on. And in our presentation of the price, it’s always accompanied by the “wink, wink, ……maybe we can do something for you….”
If we want to build customer confidence in our solution, how do we do that when we are not confident enough to defend full price?
For sales people, look at the average discount rate for all your sales for the past year. Look at the percent of opportunities, won or lost, that you discounted. Ask yourself why you need to do this, what you need to change about how you engage the customer? Ask yourself about your own confidence in what you sell?
For leaders, look at the same issues across your organization. Try to understand why you aren’t able to sell the majority of time at your full price. Consider what the lack of confidence your sales people have in selling at full price means not only to your revenue/margins, but what it means in terms of your ability to win through creating superior value.
Leaders, ask yourself, “Do we have a confidence problem? Is it a selling problem? Or do we have a pricing problem?”
If we want to build customer confidence, if we want to create differentiated value with our customers; we have to be confident and proud enough with what we sell to defend full price!
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