When you give discounts as a sales rep, you're going to make less money. You're
going to make less sales, your commissions are going to go down. So you shouldn't do it.
Hey everyone, I'm Neil Patel, and today I'm going to share why discounting is for
dummies, and what you should do instead.
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Before we get started, make sure you subscribe, so when I release more videos
like this you'll get to know about it. I have a question for you. Has anyone ever
asked you for a discount before? And have you actually said yes to them? If you
have, leave a comment with 'Yes' below. And if you haven't, leave a comment with 'No'.
Now, there's a big reason on why you shouldn't offer a discount. Now let me
first tell you a story before we go into why you shouldn't do it. When you were a
little kid like me, you probably went to the grocery store with your mom or your
dad. When you went to the grocery store every once in a while, you'd be out the
checkout. and you just have to wait a very long time before you can checkout,
because there's probably another person in front of you who's using all of these
coupons. And you know what? That person was probably my mom. And there's nothing
wrong with it, that's just what she always did. But people like my mom, who
use coupons, they always buy when there's a coupon. When there's not a coupon, they
won't buy. In other words, my mom and those people who use coupons, who are
looking for the discounts, are conditioned only to buy when they get
those discounts. And when there isn't a discount they do not buy. If you want to
devalue your product or service and be the cheap solution, by all means, discount
away. But if you want to be the premier solution
you shouldn't discount. So I thought it'd be interesting to do a study, a test. And
I did this in my past company. And after that, I stopped offering discounts all
together. Wondering what the test and experiment was? Well, I had over thirty
reps. I took half my reps and I said "Hey, our minimum price point is
$3,600 dollars a year for our software, and you're only allowed to
charge $3,600 or more. In some cases, based on usage, it
would be $10,000 a year, $50,000 a year, even
$100,000+ a year". With the other group, I said "Hey, if people want a discount you
can have some wiggle room. Don't give them too much, but you can wiggle a
little bit". And you know what we found out? The group that offered discounts closed less
deals and made less revenue than the group that said "Hey, we're not giving a
discount" Because, think of sales like dating. If you're going after this guy or
girl that you're really attracted to, and they keep telling you "Yes" to everything,
are you really going to be attracted to them? Probably not for long, because you're
going to get whatever you want. But the moment they tell you "No" you're like "Whoa,
I can't have what I want!" You're going to keep going after, you're
going to keep going after that chase. And the moment you tell your potential
customers, when they ask for a discount "No", they're more likely to sign up. I kid
you not, when you say "No" they're more likely to sign up. So here's what I want
you to do, I'm going to give you a few steps. First, use the word No. It's that simple.
When someone says "Hey, can I have a discount?" you should say "No, I can't,
because this is what it's going to cost to give you the quality of the work or
product that you're looking for. If you're looking for a lower solution or
you're willing to take less features, sure we can talk about a different scale
contract, or different pricing. But if this is what you're looking for, these
are the results you want, this is a price you're going to have to pay." So by using the
word No and explaining it, you're going to get a lot less pushback. Two, even if they
say "Hey, I gotta talk to my boss, or I got to get permission, this is my budget." You
should always say "No problem, if you want I wouldn't mind jumping on the phone
with them as well and explaining why this product or service costs as much,
what they're going to get, and all the value they're going to get in exchange for this
money." Three, instead of talking about pricing, you should talk about benefits.
It's not about how much they're paying. It's about what are they getting.
In sales, stop selling features, stop selling your
product or service. Start selling the end goal
Whatever they're expecting by signing up, that's what you should be selling. And
that's not just a solution. It doesn't matter, even if you're providing a
service. For example, my ad agency Neil Patel Digital, we provide marketing
services. I don't tell people on the phone when we're selling them "Hey, you're
going to get x backlinks x-- articles or content. We talk about "Here's how much
more traffic you're going to get. With your current conversion rate, here's how many
more sales you're going to get. Here's how much revenue that's going to produce. With
your current profit margins, here's how much more money you're going to make."
That's the beauty of it, and that's how sales should be. And by the way, if you're
ever looking to get more traffic or sales, check out my ad agency Neil Patel
Digital, and we can run the numbers on your company as well, and help predict
how much faster we can make you grow, as well as how much profit we can help you drive.
But in general, getting back to sales, those are the three things you need to
follow. And if you follow them you're going to be much better off. You won't have to
discount, and you'll find that more people are be willing to sign a contract
with you and your company. Thank you for watching, if you have any questions leave
a comment below and I'll answer it. Make sure you also like the video, share
it and subscribe to the channel. Thank you, have a good day!