2. Pivot. For all new customers, stop discounting and move toward incentivizing. This will ensure that discounting is relegated to existing customers, not new ones. 3. Set a timeline. Give existing customers a timeframe for when your discounts will end and the new incentives will begin. The more notice you can give, the easier it will be for the other side to adjust and adapt. 4. Be flexible. You’ll run into customers who will have a hard time with this transition. Understand their issues and be flexible regarding your solution — your longtime customers will appreciate that. 5. Be upfront and manage expectations. When negotiating with customers (particularly new ones), tell them early on about how they can get pricing incentives. This will help you get more productive conversations faster. You certainly don’t have to change your practice if it’s working for you. Just keep in mind that whatever you give away today will become the expectation in the next negotiation.
When someone asks for something from us, we think about what we need in return in order to say “yes.” Therefore, if we were to discount our pricing without asking for something in return, we’d be going against everything we believe in as negotiators. Discounts imply a reduction without a return, but that’s not always the case. Many of you have traded a discount for something in return, and that’s exactly what a skilled negotiator would do. However, words matter and, unfortunately, not everyone is a skilled negotiator. Therefore, the word “discount” does not always imply a trade. That’s why we offer incentives. An incentive implies a quid pro quo, and it’s universally understood that one side will have to do something in order to receive the offered incentive. Whenever someone asks for a discount, our simple response is, “We don’t offer discounts. However, we do offer incentives.” We offer incentives for a variety of points, such as volume, duration of the contract, and referrals. The incentive is based on the value of the trade. This process sets a different precedent and expectation. First, we’re not being unreasonable and just saying “no,” only later to be badgered into a “yes.” So, it helps avoid competitive arguments. Secondly, we’re setting expectations upfront regarding what we need in order to provide a pricing concession. This gives both sides a path to follow in order for everyone to get what they want. Lastly, it supports our belief regarding how skilled negotiators create value for all parties involved. If you’re already stuck in a discount practice and want to change it, you can — it just takes a little bit of time. Here are some tips for how to do it: 1. Know what to trade. Before you can offer incentives, you need to understand what’s valuable to you. Think about all of the discounts you’ve offered and ask yourself, “What would have been good to get in return?” That will help you identify potential incentives.
Discounts imply a reduction without a return, but that’s not always the case.
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