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How to Coach Sales Reps to Avoid Price Discounting

Posted by Darrin Fleming on Mar 28, 2017 9:00:00 AM
Darrin Fleming

avoid price discounting

Have you noticed your average sale price dropping?

Maybe it’s because your salespeople are too quick to offer customers a discount when they’re challenged about price. As their manager, it’s up to you to coach your sales reps on techniques to avoid the price discussion altogether or at least delay it until the full value of your solution has been presented.

Here are three tips to help you coach your sales reps in techniques that will help them avoid price discounting and the price discussion altogether. 

Tip #1: Build a Business Case

The first thing to ask your sales rep is whether a business case was put together before a solution was proposed. If the answer is, “No,” then tell the team to go back and build one. Make it part of your sales process to build a business case from the very beginning of any customer engagement.

Remind them that marketing might offer a value calculator on your website or as part of an email or social media promotion so your prospects can qualify themselves and begin to define their own needs. Your company will have advance intelligence on each customer’s issues and the type of solution they’re looking for.

If you’ve helped establish value this early in the process, it would be a shame to let it go to waste instead of using the information as a foundation for a business case. Have them reframe the conversation from the start by asking: 

  • What are your current problems?
  • What are your future goals?
  • What frustrations do you deal with on a daily basis?
  • Have you looked into any other alternatives? 

It is up to sales to ask and listen before talking about a solution.

Tip #2: Offer Results from Similar Customers 

Being able to quantify results and compare them against the status quo is a powerful method of convincing the customer to move further down the funnel. Have sales use stories about similar customers with the same problem and how your solution reduced headcount by 12% or increased customer satisfaction ratings to 99%. 

Tip #3: Use Your Tools: ROI and TCO 

There are two common reasons behind price objections: 

  1. Budget: “We just don’t have the money in the budget to pay for the solution this year.”
  2. Competing Vendor: “Another vendor is selling a solution like yours for half the price.”

Here’s how to deal with both.

1. No Budget

When buyers say they can’t afford your solution, your sales team has a couple of moves they can make. Before they do, they should bring out the ROI Tool to show how quickly the buyer’s investment will be returned if your solution is implemented. 

It’s possible that the investment will be made back so quickly or so many times over the next few months that the budget will be found to acquire your solution after all. If not, coach your sales rep to suggest breaking the offer into phases. This year one phase will be implemented for a portion of the full price. Next year another phase for another portion.

Continue until the complete solution has been implemented without lowering your price or your margins. In fact, it could help maintain a smooth cash flow by extending the deal to your buyer. If the buyer agrees, you have proof the customer wants to work with you over time.

2. Competitor Horning In on Your Action

If it’s a competitor that’s being waved in your face, coach sales to pull out the TCO Tool and make a head-to-head comparison between your solution and theirs to see the difference in total cost of ownership. 

This tool is the best way to show that, while your initial price may be higher, your competitor’s solution may cost more in the long run or deliver less benefit. 

Of course, you only want to present the results if it makes business sense. If it turns out the competitor is still the better choice according to TCO, rework your offer to provide more value. 

Conclusion 

Price discounting is the scourge of successful sales. Talking about price too soon and buckling under the first demand to discount will decrease your average sales price and your team will have to hustle more deals to achieve budget.

Ultimately, coaching your team on how to avoid the price discounting conversation will keep your bottom line healthy.

ROI Selling- Price Discounting

Topics: Objection Handling, Value Pricing