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Al's column: Discounting can actually hurt sales

March 5/12, 2018: Volume 33, Issue 19

By Jerry Levinson

 

During a recent weekly meeting with my staff, we were discussing ways in which we could improve our closing rate. Normally, there is a sale, special, discount or promotion that we offer our customers. Furthermore, it is common for customers to ask for an additional discount.

We role play at our meetings and go through the process of measuring, product selection, establishing what a customer’s experience will be and quoting her project.

We have one salesperson who offers an additional discount to her clients when asked. She feels the need to offer an additional discount whenever the customer requests a lower price. She perhaps also believes this extra discount will help her beat the competition’s price and thus earn her more business. (Oddly enough, her closing rate is among the lowest.)

Her case is not unusual—I know many salespeople who do this as well. However, when you lower your prices, you also lower your chances to close the sale. By decreasing your prices, you have just validated your client’s belief that there is no difference between you and the competition down the street. You have just told your customer the overall experience will be exactly the same as what your competitors provide, so she might as well go with the company who has the best price.

Instead of falling into this trap, I recommend setting your client’s expectations up front. Explain to her that you are not going to be the low-price leader, but you want to earn her business by showing her that she’ll get better service from you. For instance, we give our clients the “top 10 reasons” why they should do business with us, which separates us from the competition.

If you offer your customer reasons why you are different from other companies, she will most likely hire you to install her carpet rather than the competitors who offer less. Basically, you want her to consider the disadvantages of not using your company.

Preparation is key
So you’ve explained to your customer that your company provides great customer service, and you’ve expressed how much you care about your client. However, that may not be enough. Maybe one of your competitors is $1,500 cheaper and also claims to offer exceptional customer service. To make your company stand out from the others, prepare your salespeople with a list of seven to 10 reasons why clients should choose your company to do business with. In other words, make your process go from ordinary to extraordinary.

For instance, our installers remove the customers’ old carpet, sweep the floors and then treat the floors to address any pet accidents, mold, mildew. etc. Next, we install a new pad and carpet on a fresh, clean surface. This is a unique service we provide in our market.

Another way to sway a potential client to use your company—without relying on lowering your price—is to provide a copy of your liability insurance with each estimate. It’s something we all have but only produce documentation when asked. If you give it to your client up front, she’s going to also ask your competitors for that same document and they will be unprepared. They’ll have to scramble to provide that information.

If you want to earn a customer’s respect and business, you have to first respect your own talent, experience and process for providing excellent service. You should command higher prices and attract customers who are more than willing to pay you for what you are worth.

 

Jerry Levinson owns and operates Carpets of Arizona along with Profit Now for Flooring Dealers, which teaches specialty flooring retailers how they can grow their business.