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There are two types of strategy–business strategy and sales strategy. Strategy, at it's core, is “how will we accomplish our goals?” But business strategy is very different than sales strategy. I'll leave business strategy to the big boys–Tom Peters, Jim Collins and the rest.
We'll talk about sales strategy today. Because in our sales training business we find companies have spent very little time on sales strategy. Yet, it is the very thing that can propel enormous sales and revenue growth. Sales strategy is the “how” of “how will we approach our clients and acquire them?” Cold calling is a strategy. Direct mail is a strategy. Neither are optimum, but both can work. I prefer companies have a multi-point sales strategy. And “referrals” should ALWAYS be a component of it.
Here's an example of one of our clients who came to us for help.
They had 3500 customers across the midwest. Their chosen strategy though, was to ignore a “referral” strategy and focus on prospects they didn't know–commonly known as a “cold call” strategy. Absurd.
My Suggestion:
My belief is that a sound sales strategy should make things easier–not harder. So if you have 3500 customers, I wouldn't make even ONE cold call. I would do several things:
1. Do a Case Study (“white paper”)
Go back to those customers and do a “white paper” on how the solution impacted their business. Have a professional interview several contacts at the client, then get it transcribed and put it into a 3-5 page “study.” Then take that study and offer it on the website (get emails before you let people download it) and it becomes your brochure. Throw out all the brochures that puff about how good you are–and use the white paper to do that for you–in the words of your clients. There are even companies who do white papers (for about $2000).
2. Have a Seminar (User Forum) for Your Clients and Invite Prospects
Or have your customers invite their associates. I have yet to see a company who is selling their current customers EVERYTHING they could. There seems to be so much “testosterone” around conquering the new account that we forget about easy ways to do it.
3. An Educational Strategy
I would say one half of your prospects don't know the scope of what you do–nor do they know how to think about your category of solution. Therefore, education is in order. You must educate them–not to how great you are (that's a common blunder) but to what kind of pain they may be feeling without your solution. Every marketing book says that people are on a continuum from UNAWARE to ACTION. One stop on that continuum is COMPREHENSION–meaning, they comprehend that they have a problem worth solving.
These are a few of the many sales strategies that we use in our practice of helping sales teams increase revenue. I hope these can help you do the same.
First, giving discounts in the right way may well be the most appropriate thing to do. Conversely, giving a discount in the wrong way can not only lose you a sale but could lose you all possible future sales from a potential client. Read on to see what I mean.
Just suppose you say "yes" and immediately give a discount. What do you think this potential client now thinks?:
* You seem desperate for the sale.
* I wonder how far you will lower your price. Mmmm, maybe I should ask for an even bigger discount than I originally planned.
* The price you originally offered was not the real price. Are you trying to trick me? Can I really trust you?
* You don't set a very high value on your own services if you are prepared to discount so quickly.
* You agree your price is too high. This is a problem.
* Next time I come to buy anything from you, I will ask for a discount again.
The problem with just giving a discount by itself is that you have given something away and have asked for absolutely nothing in return. You've just created a win/lose situation. The potential client has "won" a discount amount and you have "lost" it. Also, just because you've agreed to a discount doesn't mean you'll get the sale, in fact, quite the opposite. You may have damaged your credibility to the extent this person no longer trusts you or wants to do business with you.
Just suppose now that instead of giving the discount you ask them, "Why do you want a discount?" The response will help you understand what is behind the request. Then, depending on how they respond, you could use one of two approaches.
Approach One
This approach is useful if money really is an issue. Instead of giving a discount, you lower the price by taking out something of value. This is a win/win choice. They get the lower price and you still maintain your price for a certain value bundle. You could say, for example, "If price is more of an issue for you, then I suggest that we take out X product/service." (Suggest taking something out of high-perceived value). The person needs to see that in order to get the discount they have to give up some of the value from your offer. Alternatively you could ask them for suggestions for what they'd like to take out. Or maybe offer a couple of suggestions. Your potential clients need to understand that there is a price for reducing the price!
Approach Two
You agree to give a discount provided they give you something in return. In exchange for a discount you ask them to give you something which is important or of value to you. That's another win/win choice. For example, suppose you offer consulting at $200 an hour, and someone asks for a discount. You could say, "I am prepared to reduce my rate from $200 to $180 an hour if you agree to an initial 100 hours of consulting." The client will receive the discount and you have received a commitment for 100 hours. Another example is giving a discount based on the client buying from you by a certain date, which is an important date for you (e.g. tax year end). The important thing is to ensure that whatever you do, it is a win/win situation and that the person is perfectly clear as to why you are prepared to give the discount.
I was once involved in a very large sale worth several million dollars. As usual, I was asked for a sizeable discount. I agreed to the discount provided the client made a commitment to purchase some other services at the same time (which they needed). As a result of being asked for a discount and the way I packaged my response, I ended up with a much bigger sale, double in fact!
I hope you're starting to see that when people ask for a discount, it creates a great opportunity for you.
(c) Tessa Stowe, Sales Conversation, 2005