Discounts and incentives are enticing but expensive in the long run. Selling value is an option that works best!
Before you begin to rely on discounting here are some simple ideas on how to boost sales without using discounts at all!
A sales manager I visited with needed to increase occupancy in the face of ever increasing move-outs and fierce competition. This executive admitted to me that he was not sure his sales people had the sales skills or confidence to differentiate their communities from the competition without the help of incentives and discounts.
The debate is ongoing about the pros and cons of discounting. Sometimes discounting can help sales people boost short term sales, but at what cost?
From my experience, discounting can have a negative impact on your sales team, your product, your quality and your profitability.
Here are some ideas to consider and some resources to help.
1) Discounting can actually create a negative image for your company?
By discounting, you could be sending the message that your service or product is just average, rather than a product that stands out from the pack. This might be intentional; A Chevy’s positioning is obviously different to that of Mercedes for example, but just consider your own offering before potentially changing your customers’ perceptions of your company and possibly even your brand by offering a discount.
2) Is your prospects Safety or Happiness more important than the cost? Rarely would customers answer that question with a yes, if asked.
Focusing on discounting sends can focus the customer on things like price instead of things that matter more like safety, confidence and quality. In the absence of value there in nothing but price to compare. Well trained sales people know how to get and keep the conversation on whats really important and that often leaves an indelible impression on the customer.
3) Are you attracting the right customers?
The kind of customers that are attracted to you because your price is low is also the sort of customer who will flee to your nearest competitor the second they have a discount or special offer running, these customers are never your best customers and they certainly aren’t loyal.
4) Are your sales people relying on price instead of skill?
When your sales people have a price reduction at their disposal they often end up negotiating with themselves. This leads to confusion and even uncertainty to the process. Offering a price reduction to early can actually slow the sales process and create doubts about your quality and stability. Sales people who rely on discounts can forget how listen for core values and root concerns and lose their ability to use proven sales skills to create value and close the sale.
5) The cost of discounting can be staggering.
When the average length of stay can range from 2 to 6 years, (depending on care level) a simple discount of $300.00 per month can potential reduce annual cash flow by hundreds of thousands of dollars and millions of dollars in overall value. I recently visited a community that was falling short by more than $100,000 a month even though they were at 90% occupancy. The sad part was that the previous sales manager walked away with significant bonuses for quickly filling the community and it would now take years to move the rents up to where they were initially budgeted
Here are some simple ideas you might consider before you start offering discounts.
Wouldn’t it be better to train your sales people to avoid talking about price altogether and instead focus on selling value?
Sales people who know the companies different and better story and have some confidence in selling value have a competitive advantage over the competition.
If one or more of your sales people have grown accustomed to talking about price instead of selling value, consider these options:
- Teach sales people to treat each customer as a unique individual who has a unique situation, needs and values. Teach your sales people how to get control of the sales conversation up front so they can gain the customers trust and build a relationship where the customer feels comfortable sharing their particular situation.
- Teach your sales people to resist mentioning price up front or directly responding to price related questions before they have discovered, clarified and prioritized your customer’s needs and values.
- Teach your sales people to always present your solutions in the light of the customer’s values which will automatically make it difficult for the competition to replicate.
- Teach your sales people to have confidence in your company’s inherent value and always ask for the sale, even if your offering appears to be slightly more expensive.
- Teach your sales people to never respond to initial objection’s. Teach them to always listen to the customer’s objections with the knowledge that objections related to price and other factual items are never real and are usually based in hidden emotions which if uncovered can be easily addressed without making price reductions.
Hopefully this article has been helpful in encouraging you to look at discounting in a different light and make some changes if needed to get your pricing and sales on a better path.
If you are interested in teaching your sales people to stop discounting, improve their sales skills and immediately improve sales and profits, Give us a call at 602-284-0124.
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Will Nowell is the President of Peak Performance MS and ValueMatch Plus. Peak Performance Mystery Shopping is a premier provider of mystery shopping services. William Nowell has been providing sales consulting and training in the retirement industry for more than 20 year
s. Will is the author of the best-selling book, ValueMatch Selling.