Discount Dangers

By Lain Ehmann

It seems like more and more buying decisions are based on lowest price, making sales reps believe they need to discount their products in order to compete. “In this day and age, that’s all anyone’s doing,” says Bob Phibbs, author of You Can Compete: Double Sales Without Discounting (Brixton Manor Publishing, 2003). Cutting your price might win you the sale in the short term, but in the long run discounting actually can be the downfall of your company. Instead of discounting, sales professionals need to learn how to sell their value, says Phibbs. Here are his dos and don’ts for selling without cutting price.

Don’t make excuses. There’s always a reason why you can’t take the high road –customer demands, pressure to make quarterly numbers, whatever. It’s your job as manager to convince your reps that partnering with your customers and learning to sell the value of your products or services as a way to meet their needs is a better way to go in the long run.

Don’t try to compete. Customers don’t go to Target and expect a Nordstrom experience; comparing the two companies is like comparing apples and oranges. When you’re selling value, you need to convince your customers that you’re the Nordstrom of your industry and you’re not even going to try to beat the discounters on price.

Do know your value. If you’re charging more than your competitors, you must be able to articulate what additional value you’re offering your prospects. “You have to educate your customers about why you cost more,” says Phibbs.

Do be picky about who you sell to. When customers push you to cut your price, consider whether their accounts are worthwhile, advises Phibbs. He cites companies who’ve lost millions of dollars in profit to maintain their relationship with retail discounters like Wal-Mart. “I would turn those sales away,” he says. “It’s not just a matter of getting a sale, I want the right kind of customer representing me. I don’t want to work with the dirt-scratchers.”

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