The Discount Dilemma
Just because the economy is improving doesn’t mean clients don’t still want a deal. In fact, they’re probably even more interested in pinching their pennies after surviving the latest recession. If you’re hearing an increasing number of clients uttering the dreaded words, “I need a discount,” you may be wondering how to respond. Andrew Sobel, co-author, along with Jerold Panas, of Power Questions: Build Relationships, Win New Business, and Influence Others (Wiley, 2012), suggests that, instead of answering yes or no, you transform the conversation—and possibly the relationship—with a few simple questions. “Clients ask for discounts for different reasons,” says Sobel. “If you can find out why your customer wants a discount by asking the right questions, you may discover that you can give them what they need without having to undercut your own bottom line.”
According to Sobel, there are at least four types of discount-seeking clients. Red ink clients are those in genuine financial trouble. Request-for-Proposal (RFP) czars believe your spa is a commodity and always seek out the lowest possible price. Bargain hunters want to feel as if you’ve given them a deal, even if it’s only a small concession. Chicken littles like to complain about how much everything costs and don’t actually need a discount to be satisfied. They just want to be heard and understood. Sobel encourages getting to the heart of the matter by asking the right questions. “First, you’ll find out what kind of discount seeker your client is,” he says. “Second, you’ll force your client to reflect on the value you bring to the table and how your business is different from other businesses. Finally, you’ll illuminate what the client really values, allowing you to potentially renegotiate the engagement in a way that preserves your profitability.”
For example, if a regular client asks for a discount on a laser hair removal package after seeing a lower price at another spa down the street, you can explain that the lasers your spa uses are more effective and require fewer treatments. According to Sobel, the key is to accentuate the value you are offering and to clarify what is most important to the client. Don’t be afraid to differentiate yourself from the competition. Remember: Once you offer a discount, you’re setting a precedent that’s difficult to overcome.
“The goal here, of course, is to preserve and strengthen the client relationship—assuming it’s a client you’d like to keep,” says Sobel. “If you’ve priced your services properly, you cannot afford to discount.” However, by simply saying “No,” you may lose the client forever. That is why it is so important to understand the situation at hand as well as your clients’ needs. Only then can you find another way to give them the value they want. Says Sobel, “In the long term, that will be viewed much more positively than a one-time discount and is a much better option than turning clients down completely.”