Published by Niall Devitt, Btb Business Training

This current economic climate creates a temptation or indeed desperation, where businesses may decide to offer customers much larger levels of discount. My last post talked about why businesses, particularly smaller companies need to be careful when it comes to offering one off or exceptional discounts.

At the request of some of my clients, this time round, I would like to consider this same point but from a different angle namely:

How do you effectively deal with having to compete with exceptional levels of discount?

And what counter strategies can you employ during negations, other than drastic price-cutting?

Standard negotiating tactics may not work in this situation, because the problem is not standard.

A first important point, is that a competitor who offers “ a too good to be true” level of discount, is often doing so out of weakness. This could range from being a clear sign that their business is in trouble (the sting of a dying wasp), to simply demonstrating poor or desperate negotiating skills.

So it clearly important, that you ask the prospect to consider the motivation behind such a move? The conversation should include, what messages is this exceptional discount sending about?

The original pricing structure
Their trustworthiness
The quality of the salesperson/employees
The way in which the business is being run/managed
The short-term health of the company
The longer-term health of the company
And most importantly for the prospect, what does this say about the competitor’s ability to deliver?

If the prospect is left with uncertainty, around any of the preceding questions, this clearly employs that there is a level of risk attached with that discount.

Now you need to find out, how the prospect feels about risk and is this risk worth taking? Putting these questions, in the context of the current downturn should act to harden the prospect’s attitude against risk taking.

The final series of questions deal with the value for money questions, which ultimately will decide from whom the prospect buys.

The objective at this stage is to get the prospect to attach a realistic monetary amount to the “less risk” or indeed “no risk” aspect of your solution. Here’s an example of what I mean:

My offering costs 12K
My competitor’s product (including discount) costs 7K

After consultation, the prospect’s agrees “the less risk” or “more ROI” aspect to my offering is worth 4K, which makes the total value of my offering in the eyes of the prospect 10K

The difference now remains at 2K, which leaves me in a position to use standard negotiating tactics.

Tags: competitive selling, cost selling, discounts, doing business during a recession, exceptional discounts, selling during a recession

This entry was posted on Tuesday, January 13th, 2009 at 5:35 pm and is filed under Sales. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.