Jul 27, 2020 • Podcast

Why do salespeople offer unprompted discounts?

Paul shares three reasons why salespeople offer discounts unprompted.

Show Notes:

Salespeople will offer unprompted discounts for three reasons: fear of losing the business, negative price perception, and sellers Stockholm Syndrome.

As you’ll learn in this episode, Paul loves golf. And you’ll hear the golf story that prompted this episode. 

“I told the guy that I wanted to buy this club, and he still gave me a discount!” 

“The seller could’ve researched who referred me to understand my pricing expectation.”

A discount is pure profit exiting your company.

Be aware of the pressure the buyer is experiencing and focus more on the value, not the price. 

“Remember, you don’t need this sale.” Accepting this reality will give you confidence.

“It’s not our perception of price that matters; it’s the customer’s perception.” Just because you think the price might be high does not mean the customer feels the same way.

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This virtual training is Thursday, August 13th, 7:00 pm CST.

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Check out this episode!

Why do salespeople offer unprompted discounts?

(Transcribed from podcast)

On today’s episode, we’re going to talk about why salespeople discount unprompted. Now that’s a big last word there—unprompted. Meaning, when customers don’t ask for a discount, why is it that some salespeople still give a discount? This drives me absolutely nuts. I can’t stand it when this happens. And I know many other people experience the same pain. Especially sales managers. It’s like, why give it up when they’re not even asking for it? So, we’re going to answer that question on today’s show. I’m also going to share what prompted this episode. It’s due to a recent experience.

But before we get into that… wanted to give a quick shout-out to Andrea at The Creative Impostor Studios. If you’re thinking of starting a podcast. If you have a story to tell; if you’re looking to connect with your audience at a deeper level, podcasting is a great way to do it. It’s going to be the wave of the future. I mean, it is something people can do. They listen to it in their car when they’re out and about. Again, if you need help starting one, reach out to Andrea and her team. They’ve been with the podcast since the very beginning. There’ll be a link to her website on this episode’s webpage.

Also pick up your latest edition of Value-Added Selling. It’s available on Amazon or wherever you get your books. Again, if you’re sick of dealing with price resistance once and for all, read the book. Follow the process. It’s going to help you proactively take control of that sales conversation and guide it away from price and toward the value of your solution. So pick up that copy.

Let’s get back to that question: Why do salespeople discount unprompted? When I say unprompted, I mean the customer or the buyer didn’t even ask for a discount, yet the salesperson gives a discount. I know why this happens, and we’ll talk about this for just a moment. Number one, they fear losing the business. They’re fearful of losing the business. Number two, they have a negative perception about the price; meaning they don’t believe that the price they’re charging is worth the value the customer is actually receiving. So, you could say that’s a negative perception of the price, or even a lack of the confidence in their solution. Or, they lack the skill to actually go out there and sell value. Then, the final piece, they succumb to what we call Sellers Stockholm Syndrome.

Let me explain what prompted this episode, first of all. If you follow me on LinkedIn, and you’ve seen some of my previous posts, you know that I am a fanatic golfer. I love playing golf. It’s a passion of mine. I posted one of my low scorecards on LinkedIn the other day. I rarely will do that, but it was just a magnificent score. With that being said… enough of the tooting my own horn, I guess. I’m past that, but I love golf.

Recently, I had to get a new driver. I was down on vacation, and, for some reason, my driver snapped. So, I had to replace the shaft of the driver. I’m just not happy with how it went. So I thought, “You know what? I’m going to go get fitted for a brand new driver.” I’ve had a couple of friends, a couple of folks that are really good golfers that said, “Hey. Go get fitted for a custom driver.” So I said, “It’s time.” I went out there, I scheduled the appointment, and I went through the fitting process. The fitting process was amazing. This company—I’m not going to mention their name because I don’t want to bad-mouth them for giving me a discount (because, hopefully, they’ll give me another one when I buy more clubs). But, the process was amazing; very professional. They took their time. They explained what they’re doing. They asked a lot of questions. They had me use several different clubs. They talked about my game. I feel like it was a professional fitting, and I would highly recommend this company.

I spent about an hour hitting different clubs. Then there was one club, one particular club and shaft that I just was hitting lights-out. I mean, it was straight as an arrow. It looked amazing. It was 300 yards on the monitor. I don’t know how accurate those are. They might put a little ego percentage in there so you feel like you’re hitting it further. But, out of all the clubs that I was hitting, this one was the club. I told them, I said, “This just feels right.” He said, “You’re hitting it great. The ball speed—everything. It looks absolutely perfect.” And I agreed with them, and I said, “This is the club.”

Let’s think about what has happened to this point. I’ve already spent an hour with this guy. It’s been a great experience. He’s built a lot of rapport. I’ve hit several different options. And I told him, “This is the one.” He agreed that this is the one. He’s the expert. He told me, “This is the one that’s best for you.” And I said, “Okay. I’ll take it.” Guess what we haven’t even talked about at this point? Price. We haven’t talked about price. And you don’t have to have a PhD in sales to realize, at this point, I’ve already bought the club. It doesn’t really matter what the price is. I already did a little bit of research. I kind of knew what to expect.

But as we start going through the price, I just looked at him. He’s going through the monitor. And as I look at him, he’s going through the different elements and he says, “I’ll tell you what. I’ll knock 10% off of the club head, and also I’ll knock $50 off the fitting.” And I said, “Okay. That sounds great.” I mean, Iwasn’t going to tell him, “Hey, no. By all means, make me pay the full price.” But, instead I just got the discount completely unprompted.

Now what happens here? I’m not going to try to diagnose this particular salesperson, but he should have realized all the signals that I gave him. The biggest one was the fact that I said I want to buy. Let’s not forget that. And I don’t even talk about price. In fact, the person who referred me to go visit this place is a customer of theirs. And so, what he should have done also is taken a look at what that other referral, the actual club that he purchased. And now they know what pricing point I expect. So I expected to pay that full price. But instead, I got a discount.

I know I went off on a long tangent there talking about the story and all that, but man, it fires me up. Because all of those discounts – the discounts that we give – that is pure profit leaving our organization.

As a salesperson, here’s what we can do. Number one, be aware of the pressure points. Be aware of not how you feel about the price, but how I feel as the customer about the value that I’m going to receive. Look at the signals – look at the buying signals. The fact that I said I wanted this club. But again, salespeople will offer a discount completely unprompted.

We now are going to dive deeper into why salespeople do offer the discount unprompted. I’m going to share just a couple of thoughts – a couple of things that can help us overcome some of these challenges.

Number one: Salespeople will fear losing the business, and that’s why they give a discount unprompted. I get this. I understand it. We’re in sales. Our goal is to sell something. And when we let that fear overcome us, it also impacts our behavior. We do things like offer discounts completely unprompted. We struggle to communicate our value when we’re feeling fearful. We’re not appearing to be fully confident. Let’s realize something for a moment. When we think about fear and losing the sale, losing the sale isn’t the worst thing in the world that’s going to happen to you. In fact, if you’re not losing at least one out of every six deals because of price, you’re probably not charging enough.

Here’s one tip in overcoming that fear. Number one, realize that it’s not the end of the world; that you really don’t need that sale. I know that might sound like, “Oh, we’re trying to brush it off.” And maybe you get the sense that, “Maybe I don’t care enough if I’m not fearful of losing the business.” That’s not the case at all. The key is we want to remain loose. We want to remain confident.

I remember early on in my sales career, I was in a sales slump. I remember sitting in the car with my sales manager and we were talking through it. He said, “Paul, you seem a little uptight.” I said, “Well, you’ve seen my numbers. I’m not having good month, and last month wasn’t that good. I’m struggling right now.” He goes, “Paul, you’re holding on too tight.” He said, “If you go in there right now, the way you feel…” He’s like, “You just don’t seem as confident.” He says, “It doesn’t really matter if you don’t make this sale.” I said, “What do you mean it doesn’t matter?” I said, “Of course it matters.” He goes, “No, Paul. At the end of the day, when you look your entire career; when you look at the grand scheme of this world,” he goes, “the world is not going to end if you don’t make the sale.” He’s like, “If you don’t make the sale, we’ll learn from it and we’ll move on. But just keep in mind, it really doesn’t matter.”

And when he said that, man, I had a calming sense that came over me. I walked into that meeting standing a little taller, feeling a little more confident, realizing that, you know what, what’s the big deal? I’m not saying to take that mindset that you don’t care, but keep in mind that losing a sale isn’t the end of the world. You always prepare yourself. You want to make sure that you go in with the right message, solving the right problem. But keep in mind, it’s not the end of the world. That’s how we overcome that fear.

Another thing that happens, and why salespeople discount unprompted, is they have a negative perception about their price, and they think the price is too high. I remember when I was selling to one of the world’s largest engineering procurement and construction companies. I was selling a solution, and my solution was $15 per fastener. Every time they fastened it… $15. The competitive product that I was selling against was about 25 cents to 50 cents. That’s a big hill to climb. But our product saved just an immense amount of labor. I mean, it was a no brainer for them. We were going to save them time, save them money.

I was talking to the strategic account manager who was with me on this sales call. I said, “How are we going to present the price?” And he said, “Let’s look at the difference. We’re at about $15 per fastener, and the competition is about 50 cents per fastener.” I said, thinking about this, I go, “They’re going to make as many as a hundred thousand fastening points on this project. That’s like a million-and-a-half dollars versus what they could pay. Do you really think they’re going to go for this?” And I remember the strategic account manager said, “Well, not if you present it like that.” He goes, “I’ll tell you what. Why don’t we do this? You let me present the price, and then we’ll talk about it afterwards.”

And so we go in there; we make our very compelling presentation. We highlighted all the labor costs, all the labor savings. And when it came to presenting price, the strategic account manager said, “And the good news is, this is only going to be about a million- and-a-half dollars for you.” And when he said that, I almost choked. He presented it like that… onlya million-and-a-half dollars. And they ended up buying it.

We got back into the car afterwards, you know, after the high-fiving and all that stuff. And he looked at me and he said, “Paul, so when you think about this… a million-and-a-half dollars,” he said, “that’s a lot of money to me and you.” I said, “Yeah. I think it’s a lot of money to a lot of people.” He goes, “What you don’t understand—the company that we just talked to—this is a $5 billion project. And they probably have hundreds of projects like this going on worldwide. There are not enough zeros behind anything that we sell to frighten those people.” He goes, “They don’t care. For them that’s almost like a rounding error.” He goes, “It’s not about your perception of price, but it’s about the customer’s perception of price.” When we think about that, we can take confidence in knowing that it’s not how we view the price, it’s how the customer views the price.

This is the final tip and idea. Something to think about. Salespeople will discount when they succumb to what we call Sellers Stockholm Syndrome. You’ve heard of Stockholm Syndrome before. This is the famous bank robbery where after, I think it was like two or three days of the actual people being held captive, held hostage. By the end of it, when they actually were released and they were put on trial to help press charges against the actual bank robbers, they started to side with the bank robbers. They would say things like, “I can understand why they needed to rob the bank,” or, “Maybe we should take it easy on them.” They were siding with the enemy, and it’s because they built a rapport with them. They felt sorry for them.

This happens with salespeople as well. As salespeople build a rapport with their customers, and they want to do them a favor—they want to make sure that the customer likes them—they’ll give them a discount. They’ll think it’s the fair thing to do – the right thing to do. And that’s a challenge. As salespeople, it’s important that we maintain the right amount of professional distance, where we still can make the tough calls. But, we also have to realize that, “We’re a for-profit company, and we don’t need to discount to prove our value. We don’t need to discount to further build up our relationship with that customer.” We need to be aware of that.

But either way, hey, the golf experience was great. On future podcasts, I’ll let you know if it helps out the handicap at all. Either way… very pleased with the purchase. And I know that someone out there right now is probably saying, “Well, yeah, Paul. But you know, they gave you a discount so does that mean you’re more likely to go back to them?” The answer is, I was more likely to go back with them either way because I had such a positive experience. They didn’t need to discount, and you don’t need to either.

That’s the episode today: Why do salespeople discount unprompted? Share this with your colleagues, especially if they love golf. They’ll probably really enjoy this one.

Make it a big day.

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