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Here's why chronic discounting happens

If your sales organization is like a few I've spoken with recently, your team is chronically discounting.

And this chronic discounting is bringing down the average sales price in your organization.

This happens for two key reasons.

First: your team doesn't adequately differentiate their product from the competition (or they're unable to do so).

Note: this does not mean explaining which features of their product or service are better, such as:

X “Our product support team is available 24/7 whereas other companies only respond to tickets during business hours.” Great, but why does that actually matter?

Instead, differentiation means being able to articulate how you solve the customer’s business problem better than the competition does.

So a more effective version of the above is: “We recognize that the attrition rate of ecommerce customers increases by X% when customers need tech support and don’t receive an answer until the next day. That’s why our 24/7 support reduces customer attrition by X%.

But even this level of differentiation isn’t enough.

Next: through discovery, your team must establish the value of this offering to the specific customer (I know, we’re all sick of the word “value” – but stick with me here.)

Value is contextual – not absolute. So the value of what you offer will change from customer to customer.

The value lives in the GAP between the customer’s current situation (in which they’re experiencing a specific business problem) and the future outcome they desire (in which the business problem has been resolved).

To continue the example above of high customer attrition:

“Mr. Customer, you shared with me that your customer attrition rate is X% due to technical issues. That equates to a loss of $X per month based on your customer base and average account size. Our 24/7 supports prevents this level of customer attrition from happening, which means you avoid losing $X of business per year.”

Since value is contextual, the price of what you offer is RELATIVE to the specific value of the GAP.

When the GAP is big enough and you can bring the desired outcome, the price is small in comparison.

Differentiate. Establish the GAP.

If you don’t do this, the only differentiation is price. And that’s when discounting happens.

In other words, without differentiation and the GAP, your team will be forced to race to the bottom on price.



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