Offering discounts often tends to reduce customer loyalty

Last Updated: January 3, 2011By Chintan BharwadaTags: customer loyalty

“Oh yes, we love you and your product. This is just perfect for us, and we would like to do business with you, but your price is too high. Can’t you do something so we can give you our business?” How many times have you heard something like that? Do salespeople get nervous and worry about losing such a piece of business?

Honestly, I think most of us try to get the prospect to focus on the price/value relationship. What usually happens, however, is we try to find out how much the prospect would be willing to pay and then negotiate the price down to almost that level. When I ask this question of overcoming price objection, most salespeople I know respond to it by trying to find out how much the prospect is willing to pay.

Price discounting might have an opposite effect

People get suspicious when they want to buy something and they are offered a discount without much reason. Think about it, offering discounts-far from building customer loyalty-often tends to reduce it. Still, many businesses think that they can get the sales if they lower the price. When people object to finalising the sale, they may say it’s the price that’s keeping them from buying. However, it could well be something else. They may even be willing to pay the price, but by objecting, they feel they might get a better deal.

There is nothing wrong if your prospects want a better deal, the salespeople who are good negotiators have trained themselves to be prepared for this situation. The idea is to be armed with the history and the needs of the prospect. You need to learn their motivations, their history of purchase, and other factors impacting the prospects decision. You should also figure out the value of business, and how you can best meet the needs.

Above all, you must understand just how badly the prospect needs your product. Prepared with this information, you should be able to close the sale.

When the question of price is an objection, you need to express surprise and start asking questions: “What makes you think the price is too high,” or “Why do you say that?” It is time for the prospect to do the explaining, not you. Well, I am not asking you to defend your price. After they answer this question, ask another. Keep the prospect on the defense rather than letting them be on the offensive.

If you are reducing the price for no good reason, please understand that price discounting will not build customer loyalty. Perhaps you will get another sale. There may even be the chance to get additional meetings at a later date or even a multi-year contract for that piece of business.

When you think about negotiations, you should consider trade-offs. It really is a matter of concessions.

Chintan Bharwada

Chintan is the Founder and Editor of Loyalty & Customers.

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3 Comments

Chintan Bharwada January 2, 2011 at 11:56 pm

New post: Offering discounts often tends to reduce customer loyalty http://bit.ly/h9U1lv
Virtual Agent January 4, 2011 at 11:43 am

Discounts can be pretty suspicious. Especially on some products, it sometimes means that maybe the expiration date is coming close, or it might have some sort of damage that it needs to be sold asap.
Herby September 18, 2012 at 1:04 pm

I agree in some degree. but it all depends on the product and the asking price. Certain products are better sold at a Deal rate and Discounted prices.

This where the owners will have to decide what works best with what products.

great posts

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