The D Word

Let's improve our vocabulary, shall we?

Discount: (Noun) A way of telling Customers that what you sell isn't worth what you said it was.

We've talked before about the difference between price and cost. But how do you show loyal Customers your appreciation if you can't offer them a break?

Sales is a transaction, right? You offer a product or service, and the Customer offers money in exchange for that good or service. If you're doing it right, every step of the sales process is an exchange: You tell me your name, I tell you mine, you tell me your needs, I tell you what solutions I have for those needs, you tell me your budget, I give you a proposal. If you are doing Sales right (and most companies don't), you never give anything without getting something in return.

The same is true for any breaks that you give Customers. To get a break, there must be a transaction, and i don't mean just for doing business with you. To pay less, a Customer must buy more.

This shouldn't be a secret. You should have a written breakdown of exactly how much a Customer must spend to get each specific break. That makes the break an incentive, not a discount.

Discounts are given; incentives are earned.

You don't give discounts because your products, services, and company are superior to your so-called competitors. You don't have to give discounts.

That list of incentives should be passed out to every Customer. Your process is transparent; you don't need to hide anything because you don't run that kind of business. And no Customer gets an incentive without the corresponding increase in spend.

By now, some of you are shaking your head, saying, "What about high profile Customers? They draw other Customers because of their name. Surely they get a discount?"

No.

Remember what we said about the "special situation"? If you allow even one, all of your sales will slide down that slippery slope, eat into your profits, and before you know it, your Customers and business are gone.

Because you stick to your incentive process, you have predictable metrics. By knowing your marketing conversion rate, retention rate, and sales close rate, you know how many Customers you have and will have. You can forecast revenue because each Customer has told you what they expect their spend to be.

Wouldn't you rather live inside this process than one where you have no idea where your money is coming from, or if it will continue to come, or why? Of course you would, because it makes sense, and you are a sensible person. That's why you're here.

If your organization is B2B, the same rules apply. If you have repeat Customers, B2B or not, there's no harm in applying an incentive for their loyalty, too, if you like. And if they bring you more Customers - not by reputation, but via an actual referral. Again, make sure that the terms are spelled out, clear, and followed to the letter.

Welcome back to sanity.