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Direct Marketing Article |
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Does Volume Make Up for Low Price?
By Mark Hunter
The phone rings and the sales manager hears on the other end the
all-too-familiar plea of a salesperson. The salesperson tries to convince
the sales manager that it makes so much sense to offer the prospect a
discount to get them to finally become a customer. Of course, the
salesperson has the expectation that this new customer will quickly become a
high-profit customer. The sales manager has heard the same plea hundreds of
times before, and yet for some reason, the salesperson and the lack of
current sales suddenly make offering a discount very attractive.
It's as if we're watching the unveiling of a very slow accident that is
completely avoidable and yet happens anyway. The salesperson gets it into
his or her head that the only way to close the deal is by discounting the
price. They just need to convince their sales manager to go along with it.
When this occurs, a major shift happens with how the salesperson does their
job. No longer are they selling to the customer; now they're selling to the
sales manager. The problem with this is simple – a salesperson gets paid for
selling to customers. That's how both the top-line and the bottom-line are
made.
If you're reading this and you're a salesperson, here is some very simple
advice. Contrary to what you believe will happen, you will never make up in
long-term profit what you're about to give up with your immediate discount.
Sure, there are always exceptions to this, but such exceptions are similar
to me winning the lottery. Is it doable? Yes. Is it probable? NO!
When you discount the price, the new price is now the price of value the
customer is willing to pay. When they're offered the price once, they will
expect it again and again. When you attempt to move the price to the "normal
or regular" price, they see it as a price increase. Even if you do get the
price up to the "normal or regular" price, you're still behind the profit
curve because of all the product you sold to the customer at the lower
"discounted" price.
I hear this argument a lot: "You don't understand. If I didn't offer the
discount, I would never have had the opportunity to move the price up,
because they would never have become a customer."
My response is always the same: "So what! It doesn't matter." In your quest
to get the customer, you cut your price. But you did so much more than that.
What you did was cut your profit dollar for dollar. That is a very simple
fact of what happens when you cut your price. It's highly unlikely you cut
the cost of your goods or services, because your goal is to get the customer
to experience what you can do. That means the only place to cut is your
profit.
Here's the deal: Your ability as a salesperson is not in how much you sell,
but in how much you earn for your company. It's the bottom-line profit that
counts, and anytime you reduce your price, you're slashing your profit.
There is not a sales manager out there of any quality who will allow any
salesperson to spend their valuable time trying to sell internally. The
focus must be on external selling. Focus first on creating value by
determining the needs of the customer. Then position your product or service
as the solution, and do so at full price.
This is the only strategy that ensures you are not only protecting profit,
but also ultimately in a place to increase it!
About the Author:
Mark Hunter, "The Sales Hunter," is a sales expert who speaks to thousands
each year on how to increase their sales profitability. For more
information, to receive a free weekly email sales tip, or to read his Sales
Motivation Blog, visit
www.TheSalesHunter.com. You can also follow him on Twitter
http://twitter.com/thesaleshunter, on
www.LinkedIn.com (Mark
Hunter), and on his Facebook Fan Page,
www.facebook.com/TheSalesHunter.
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