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The Art of Discounting

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By Allan Ferguson

One area that can hurt your business if it not executed correctly is discounting.

My businesses use discounts, but there needs to be a systematic plan for why you’re offering the discount and how it’s justified.

As an example, Omega generally offer two day-specific discounts per week as that suits our customer demand and helps keep the phones ringing.

If you don’t have a reason or a discount strategy in place then a technician perhaps starts discounting to the wrong customer who then takes advantage of the situation and it can cause unnecessary issues.

For example, let’s say your technician has quoted a drain replacement job for a customer at $5,000 across one and a half days.

The customer proceeds to repeatedly ask for a discount and without a formalised process or reason, the technician finally agrees to do it for $3,500.

Can you see what is flawed with this method? You’ve arbitrarily devalued your service and instead of satisfying a price-shopping customer who doesn’t value your service you may instead agitate them.

The unsatisfied customer could ask your company why you were charging $5,000 in the first place for a $3,500 job, which is another unnecessary problem you’ve created through a random discount.

There is a better way however of sensibly offering a customer a reduced quote in situations like this whilst creating a win-win for both parties.

Let’s use the above drain replacement quote as an example again.

You’ve sent your technician to quote the job and the customer isn’t happy with the $5,000 total cost and asks for a discounted rate.

Instead of agreeing to or even refusing this request, the technician instead suggests a supervisor visit the site and take another look at the work required.

With a fresh set of eyes the supervisor can explain in detail to the customer the components of the $5,000 quote.

Perhaps the supervisor clarifies to the customer the cost of concreting is significant in both expense and time, with the concreting taking up half a day on its own.

The supervisor then explains to the customer “maybe if you have a mate who could help you with concreting, we could cut that out of the quote altogether and bring it down to $3,500, plus it now would only take a day for us to be here.”

The customer may then say “sure, my brother-in-law would be happy to help,” and you now have a win-win situation.

You’ve offered the customer a reduced quote which means they feel like they’ve got excellent value but you actually haven’t offered a discount on your services!

You now have a full day’s worth of guaranteed work for a satisfied customer and by eliminating the half a day of concreting have also freed up your schedule to dedicate to another job.

Always discount deliberately and systemically and you’ll continue creating win-win scenarios, otherwise it may not end well for your business.

Allan Ferguson is the CEO of Service Professionals Australia.

To get exclusive insight into marketing your business and learn leadership secrets from Australia’s premier leadership coach Peter Cox, download episode two of Allan’s podcast Pipeline to Profitability now

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