I once spoke at a large conference on the subject of how to maintain your price and avoid discounting.  After the presentation, a businessperson approached me and asked what my strategy would be if his company needed to discount price to create cash flow.

This is not an easy question to answer.

Sure, I could easily throw out a response that implies that the reason a company has to discount is because it hasn’t done a good enough job of building its pipeline or hasn’t invested enough in the right type of marketing.  I know, though, that this isn’t the answer a person needs when faced with the issue of cash flow.

Cash flow is a huge issue to a lot of companies, large and small.  I would be lying if I didn’t admit that even in my own company we’ve experienced periods of tight cash flow.

The question we’re answering is if cutting a price to get a deal is a smart way to create cash flow.

Here is my answer:

Before making any decision about cutting a price to create cash flow, think about how you can maintain the price point and offer the customer more value.  Cash is king. I first heard Donald Trump speak that phrase and I’ve never forgotten those three words.

Offer your customer more of something. Anytime you can close the sale at the original price, you’re going to be better off.  Just be careful in what your additional offering is.

The last thing you want to do is offer the customer something more that ultimately winds up costing you more in cash long-term.  Notice I said cash.  I’ll give up some percent margin before I’ll give up cash.

Before you look at offering the customer more, you have to ask yourself if you’ve truly done a thorough job of actually selling.

Many times I’ve found salespeople will cut their price only out of a false belief that that is what is needed to close the sale. You might say the salesperson or business owner is panicking over what they believe, not what the customer believes.

Before you consider discounting your price, make sure that the customer fully understands the value proposition you offer and that you fully understand the customer’s needs and wants. Too many times salespeople will flinch and offer a reduced price too early in the selling process.

A thorough selling process means you need to ask enough questions and follow-up questions – and listen – until you are certain you understand what the customer wants.

The more you focus on the fact that what you have to offer is of value to your customer, the less appealing discounting becomes as the only way to close a sale.

Is Discounting Ever Needed?

If what you’re selling is bought solely in an auction type of environment and cutting your price is the only way you know you can get the deal, then yes, it does become an option you can use.

Regardless of the circumstances that are compelling you to discount, you still must be very wise in your approach.  You have to remember that if you cut your price for one customer, you will potentially send signals to other customers and prospects.

If all of your current and potential customers are going to find out, then all you’ve done is move yourself into a permanent state of always having an issue with cash flow.   The reason is simple — you’ll now be selling everything at a lower price.

What Will Your Discount do to Your Competitors?

Just as you need to be conscientious of what messages you are sending to customers and future customers, you also must be aware of what your discount says to your competitors.  How will they respond?  If they respond by cutting their prices to match yours, then congratulations – you’ve now entered what I call “pricing death spiral.”

Pricing death spiral is when one company cuts their price and everyone follows.  I have one response – stupid!

“Pricing death spiral” is often broken only when one company ultimately goes out of business or leaves the marketplace to focus on something else.

If you do need to cut your price to gain a sale to create cash flow, then it’s imperative you do it in a way that will not send signals to other customers or competitors. Make sure the customer is isolated enough and the customer is not going to become a long-term customer.

One last point I would make about discounting is that you may have to clarify to your customer that the discount is a “one time” discount. The last thing you want to do is discount a price for a customer on one sale to create cash flow, only to have them expect the same reduced price for years to come.

To further protect yourself from being in the position of having to discount, be sure to build a marketing strategy that allows you to sell to different markets or industries. This way, even if you have to discount, you can do so with one set of customers as opposed to all your customers across the board.

Only you can decide if discounting your price is a good way or bad way to create cash flow. No matter what, make sure you think it through.

Mark Hunter, The Sales Hunter, is author of “High-Profit Selling: Win the Sale Without Compromising on Price.” He is a consultative selling expert committed to helping individuals and companies identify better prospects and close more profitable sales. To get a free weekly sales tip, visit www.TheSalesHunter.com. Read the first chapter of his instant-classic “High-Profit Selling” here.

Getting prospects to return your calls is one of the most frustrating problems you experience. You can be 90% sure a deal will close in the next week and suddenly, silence. If you keep calling, you appear desperate and annoying, so what do you do?

Before you drive yourself completely crazy, take solace in the fact your competition faces the same problem. However, that alone won’t pay the bills. Before exploring some tactics that will help you get your calls returned, first ask yourself, “Why don’t prospects return my calls?”

Here are some of the more common reasons prospects don’t return calls:

• Fear – Most people don’t like confrontation. They would rather completely avoid you, than deliver you bad news.
• Too Busy – Prospects are bombarded by calls every day. Even though returning your call may only take 5 minutes, the thought of having to talk with a sales person when they have nothing new for you and a pile of work on their desk can seem like an hour. In addition, if they have 10 similar calls that day, it will take an hour.
• Lack Urgency – If their problem hasn’t reached their pain threshold, they will lack a sense of urgency to fix it. Without pain, their problem isn’t a high priority.
• No Value – If you are leaving messages that don’t provide additional value or specific reason for them to call you back, there is no point for them to call you. “I’m just calling to see if you got my brochure (or made a decision),” won’t stimulate someone to return your call.
• Using You – If a company is just fishing for information, they will lose all interest once they receive what they want. Don’t give up information without getting something in return. If they want a price quote over the phone or a brochure, make them first agree to an appointment.

How do you get people to call you back?

Your first action with your prospect is to establish the ground rules and expectations. Your prospect needs to know it is okay to say, “No.”

For example: “Mr. or Ms. Prospect I appreciate the opportunity to speak with you. At the end of today’s meeting, my goal is for us to establish if my product or service is a good fit for you and your company. In order to do this, I’d like to ask you some questions, so I better understand your business. Are you okay with this?

If at any time during our conversation today or future conversations it becomes clear to you that we aren’t a good fit, or you decide to go in a different direction, are you comfortable with telling me, ‘No’? In addition, if at sometime I need you to return a call or reply to an email for additional information or to determine what you want next, what method do you prefer? Great, let’s get started.”

By doing this, you are laying the ground rules. If they don’t return your calls, politely remind them of this conversation. This doesn’t mean you email or call them every other day. Give them an opportunity to respond. I suggest at least 4 business days between contacts.

Let’s say, you’ve laid the ground work, and your calls still aren’t returned, here are some specific techniques you can do to reach your prospect.

• Disengage Caller ID: Contact your phone company and ask them how to temporarily disengage your caller id. Let’s face it, we all screen our calls. If they still don’t pick up, don’t leave a message, but call back at a different time using the same technique.
• Use Email: Many times if a prospect can’t be reached over the phone, an email is your best alternative. I’ll often include the following in the Subject Line: John, regarding your request about…
• Fall on Your Sword: Don’t come across as upset or demanding. Take the opposite approach:
  

“Mr. or Ms. Prospect, unfortunately we’ve been unable to connect, and I’m starting to feel like I’m becoming an annoyance. I certainly don’t want to be a pain in your side, but I’m feeling like your situation has changed. Please let me know what’s changed, and how I should best follow up with you. This politely let’s them know they haven’t returned your calls, and they appreciate your graciousness.”

• Contact The Receptionist: That’s right, call the receptionist. Let them know you have had trouble connecting. See if your prospect has been out of town. They may even have information that sheds light on the situation. You may uncover some important internal politics or changes that are happening.
• Go Over Their Head: Sometimes, you may need to make an end run. One catch. Have your manager make the call to the person over your contact. This way you still may be able to save face with your prospect.

Call at Higher Levels: Most sales people think they are speaking with the decision maker, when in reality they aren’t. Many times sales people will ask, “Are you the decision maker?” Unfortunately, too many people don’t want to admit they aren’t the decision maker. To get a more accurate answer, ask them, “Who else besides yourself will be involved in the decision making process?”

 If you start by calling the actual decision maker, you will receive more direct and honest answers. True decision makers don’t have time to play games. In addition, if they tell you to call someone lower in the organization, you can always use that as leverage if someone isn’t returning your calls. You might say something like:

“Mr. or Ms. Prospect I know you are busy. However, I promised _________ (their boss) I would provide them periodic updates, or information by this date. Unfortunately, I can’t provide them with this until I speak with you concerning…”

• Fire Your Contact: If everything else has failed, it’s time to fish or cut bait. Reach out one last time, to inform them you are throwing away their file. Believe it or not, this will get some people to realize it’s time to make a decision. If it doesn’t work, walk away knowing you’re better off spending time with real prospects.

One final thought. Sometimes deals fall through. In this case, the best thing you can do is to build top of mind awareness. Create your own drip marketing campaign, so when a company is prepared to purchase, you are at the top of their list, or at least number two. In addition, this is a great way to obtain referrals!

About The Author:
I started Slife Sales Training, Inc. with my wife Daphne in 1999. Since then, our company has evolved into one of the most extensive and affordable online sales training resources www.salestrainingcentral.com. Sign up for our FREE 3-DAY TRAIL today on the right hand side of this page
----------------------------------------------------->>>>>>>>>

Back To Top
Article Archive

Is Your Customer Cheating on You?
by Michael Nick

What a sinking feeling when you find out that your customer is cheating on you with someone else. You had your suspicions when they were distant, and didn’t call you back right away. You were concerned when they didn’t engage with you like they used to. Now what? Can it be saved? Should you just move on?

All very good questions, and we all have had to deal with this one time or another in our lives, customers leave when they feel they are not getting out of the relationship what they expect. Be sure the expectations are set early in the relationship. Like during the sales process.

The key to any relationship is honesty. You need to be honest as a sales professional from the moment you meet this prospect through the life of the relationship. Sometimes the truth hurts, sometimes it is uncomfortable to say what you think, but remember your relationship is a two way street. You both have to be getting something out of it, or one of you will stray.

In 2004 I wrote a book called ROI Selling, the 360 degree approach (Available at Amazon.com on Kindle). The premise of this book was to identify prospect issues during the sales process that align with specific values as you’ve defined in a Value Inventory. Then post sale, to return and measure the value delivered.
I spent months researching companies that followed this philosophy. At the time less than 5% of the companies I interviewed returned to their customer’s and measured their successes. Recently there has been an upsurge in companies looking to offer this post-sale measurement as a service. In the past three weeks I have been approached by several large organizations interested in how to build a program around the 360 degree approach.

The reason I bring this up is if you are NOT measuring your success post sale, how does your customer realize the value you have delivered? Most strategic buying decisions are made based on an 80% - 90% fit. When things begin to fall apart the focus always shifts to the 10% - 20% that wasn’t a fit. By that time the prospect has forgotten about the 80% - 90% you have delivered.

I am getting ahead of myself. Let’s step back and start with how to implement this as a program.

The first thing you must have in place is a Value Inventory. You may think you know your value proposition, but until you are able to break it down line by line and determine your competitive edge and your prospects priorities, you likely do not have a handle on your true measurable value.

Assuming you do have your true value you then need to create a series of questions that measure status quo.  In other words if you deliver cost savings related to labor cost reductions, you need to be able to measure the current cost of the labor activity. Lock this cost down and preserve it.

Next establish a goal for a cost reduction or revenue improvement. In the example above establish a labor cost reduction goal. You and your prospect (now customer) must agree on the goal. Is it possible, is it probable and most importantly is it measurable?

Return to your prospect and measure the revised cost of the labor activity and compare the current cost to the established goal. Did you achieve the goal? If not, why not? This is an opportunity to sell more product or services. Stay engaged with the customer and help them determine why they did not achieve the goal. If they did achieve the goal look for other areas of their organization you can help them with. By returning to your customer to measure the success of your deliverables it reminds the customer of the reason they bought from you in the first place. It also keeps them focused on successes, not the 20% that you did not deliver as defined when they purchased from you long ago.

Is your customer cheating on you? If you are not communicating with your customers, making them feel like they made a great choice in a partner, and helping them with their issues, pains and goals it is likely you will be cheated on. Customers are great to have, make them realize it and appreciate their business every day.   

Why Johnny Can't Sell 
The other day I was watching a kids soccer game and overheard a couple of parents talking about this young girl that was developing some new soaps, scrubs and makeup. She started a company and was selling the cosmetics through various stores and outlets. When I heard the word "selling" it drew me in closer until I had to interrupt and ask, who is this girl? 

Both parents point to the field and said right there, Savannah, she is the one kicking the ball into the goal. I was shocked, this girl is no more than 12 years old, very athletic, and did I mention she is no more than twelve years old? I had to learn more. So I waited until the game ended and approached her and her parents and said, I heard you started a company, I would love to hear your story, why did you start to develop these cosmetics?

"Simple, I love to play soccer, hike, swim, run, bike and do the occasional tri with my mom. You know when you play hard you sweat! I want to look good doing it. Hence the name of the company: Twisted Tomboy. You see, Twisted Tomboy let's me be an athlete, and yet maintain my girlieness. 

What products have you developed? I asked "I've been making lip balms, scrubs, soaps and lotions as gifts for my friends, family and of course teammates."

Of course.

"For over a year now. All of a sudden people I didn't even know were wanting to buy them for their friends and loved ones. So I said to myself, hey maybe I could make a little business out of doing this."

Really?

Yep! And one thing led to another and now we are in stores all over Washington, Oregon, California, Alaska and Montana. You need to visit my website, www.twistedtomboy.com it explains a lot more. 

I gotta go, I late for a softball game, how do I look? Need a little lip balm?

Check out this amazing store at www.twistedtomboy.com and tell them Johnny sent you.  

To follow Savannahh on Facebook click here

About The Author:

Michael Nick is considered to be one of the foremost authorities in the world on the subject of value estimation selling. Michael’s first book, ROI Selling (Dearborn Publishing ©2004) was a business best seller. In 2010, Simon & Schuster picked up the reprint rights giving ROI Selling another five years of availability in the market.

Over the past 13 years Michael has worked with Companies like, HP, Autodesk, Fiserv, Ingersol Rand, Trane, NEC, Checkfree, Bomgar, Rockwell Automation, Oracle, Great Plains,and more.

Visit him at: http://www.roi4sales.com

Back To Top
Article Archive