(Note: In Spring 2006 I worked closely with two companies preparing for Initial Public Offerings. This transcript is from a curated series of late-night sessions I recorded to train the corporate marketing and sales teams. In these private trainings I answered their specific questions about the strategies and tactics (and art) of establishing your branding and positioning as unique and special, to give you the edge in a crowded marketplace. These have never been shared publicly before now, and even though the recording quality is poor there are some golden nuggets of information in each that will expand your understanding of these key topics as well.)
I have always been a person that did not like to give away money. I believe whenever we can, what we should do is build value, and not just discount. And when we do discount, we should do it in a way that implies that we’re adding value, not that we’re cutting our price.
I’m going to give you several examples here.
Back in the day, I was in the car business. And I have done everything from wholesaling, new car management, used car management, fleet management, fleet sales, new car sales, used car sales, I even traveled as a “mercenary” doing car sales for the better part of a year to the tent sales that were running all over the southeast.
In all that time, in every place that I was at, I held the highest gross profit of any of the salespeople. And I also had a high number of repeat customers. By the time I left the business I had over 450 customers, many of whom had referred other people to me or purchased second or even third vehicles from me.
So, holding gross profit, I mean holding gross profit and satisfying the customer, does not and are not mutually exclusive.
The way that I was able to hold the gross was by building the value.
Now, a lot of people think when it’s time to make an offer that the only offer that they can really do is “…but if you buy today It only costs this much…” or “Deep discounts this weekend…Memorial Day Sale…” that kind of thing.
I can do that, and I have done that… but I don’t like doing that. What I would prefer to do in every case that I can, is figure out a way that I can add value into the offer. And this ties back with the post called Your Prices Are Too Low (Your Prices Are Too Low!).
Generally speaking, if I have enough room in the deal, then I have room to create added value. For example, if I’m selling something for $1,000 and it cost me $800, I don’t have a lot of room. If I am able to sell that for two or three or four or $5,000 and it still cost me $800, then I have a LOT of room…not just to discount, but room to be able to add more value.
Psychologically, when all I do is just discount something, I’m telling people that it’s not really worth what I’m pricing it for in the first place.
So, I am training that customer to a feel like they’re going to get a better price for me if they wait.
So, I take away their urgency, I don’t add to a and b,
I’m training them that any price that I say as a price really is negotiable. I don’t like to do either. (For more on this topic see the post on Training Your Prospects And Customers)
What I would rather do is to build value. I would rather add…
If it’s a course, I’d rather add another course.
If it’s a piece of equipment I’d rather add a service contract to it for free, or a warranty.
Or and a carrying case, if you will, or whatever, you know relates to what it is that you’re doing.
I’ve done this with events. Instead of discounting the event I’ve actually gone UP on the price of events and given things like “travel allowances” to people, which amounted to nothing more than a discount of $500 or thousand dollars… but I called it a “travel allowance.”
So I’m giving them something, I’m not just taking away the price. And there are a lot of things you can do to add value.
In most cases, you can add value to your proposition instead of taking away price… AND increase your sales.
You also increase the perception in the marketplace, that you ARE the value proposition for them. And that is more valuable than gold because that increases the perception of what your products or services are worth.
So always try to add value instead of taking away price.
(For more on this topic see also Perception IS Reality!)
