Want a quick way to destroy sales motivation and profit at the same time?  Picture yourself as a sales manager who suddenly receives a phone call from a salesperson who is on the verge of making a sale.  Here’s a sample of that typical conversation:  

Salesperson: “We have to cut our price to make the sale. It’s just for this one sale. I won’t need to do it again.”

Hmmm.  Really? How do you think the sales manager should respond?  The sad comment is that too many times, the sales manager – after sounding tough for 30 seconds – gives in to the idea of lowering the price by saying something like, “Well, just this time, but we certainly can’t make this a habit. The only reason I’ll say ‘yes’ this time is because business is slow right now.”

I can’t tell you the number of times I have heard this rationalization.  Sadly, what blows me away is the number of times I have heard it when somebody is trying to close a sale – but then I never hear from these same people a year or two later expressing what the long-term results have been to the bottom-line.

Why do salespeople or sales managers never share with me the long-term outcome of such “price reduction” strategy?  Because it never works out the way the salesperson or the sales manager initially believes it will with regard to profit.  The “one-time” sale soon becomes a rule rather than an exception.

Let’s look at this from the customer’s perspective. Imagine you are the customer looking to buy a particular product. If you are able to get the product at a reduced price, don’t you think you are going to tell other people about the deal you got?  Sure you are!  

So why as a salesperson do you think that you can sell something at a reduced price in one situation, but then turn around and stand strong with your full price in another situation?

Cutting your price to secure the initial deal takes profit out of your pocket and compromises your selling position with future customers.

As a salesperson, you have to take a “big picture” approach.

The first price the customer gets is what they believe is the right price with the right value.  If you then try to express a higher price to one of their friends who is looking to buy, not only does your new buyer think this is unfair, but your original buyer thinks it’s unfair too. They are upset by how you are treating their friend! Good will is instantly destroyed.  Your reputation takes a hit.

Feeling insecure and not wanting to jeopardize any future sale, the salesperson starts to wander down a dangerous path. They justify in their own mind why the full price is just “not the right thing to do.” In the blink of an eye, with that one thought, the salesperson has committed themselves to lower profit on a going-forward basis (maybe even indefinitely. Yikes!)

As tempting as it might be to cut your price to gain a new customer, don’t do it!

If you can’t land the customer at the profit margin your business plan is built upon, then that particular customer is not worth having.  Think I’m crazy?  Run the numbers over the long-term and you will see what I mean.

To avoid being in the situation where you feel desperate to get a sale “at all costs,” here are some strategies to put in place:

First, maintain a strong pipeline of prospective buyers.  Discounting is far more prevalent when a salesperson believes the sale on which they are currently working is the only sale they are going to get.

Second, never attempt to close a sale until the customer has identified to you the benefits they want and the needs they have.  When the customer understands the benefits they are gaining from the particular product they are considering, then you’re in a much better position to close the sale by not having to discount your price.

Too many times, the salesperson heads down the discount road because they have not taken the time upfront to truly understand what the customer wants and needs.

As tempting as it can be to close a sale quickly, the pressure of the price discount is many times what emerges when you close too early.  Allow the customer to verbally describe the benefits for which they are looking. This gives you time to expand on them and, in turn, help the customer see the full value of what you offer.

Protect your profit.  Protect your sales motivation.  Both are too valuable to toss aside, all in the name of making a sale.