What to do When Your Customers Ask For a Discount & Why You Shouldn’t Give Them – Steli Efti

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Everybody wants a deal. Especially your prospects. And while you probably think giving 10% or 20% off isn’t a big deal, giving discounts just to win business can cost you more than money. It can kill your company.

Sure, you probably think I’m being dramatic. You’ve been giving discounts for ages and your revenue and customers are still growing. Right?

The problem is, when your company culture is a discount culture you might win a few battles, but you’ve already lost the war.

SaaS companies today don’t win on being cheap. They win on being valuable.

Let’s start off with the obvious: The SaaS landscape today is more crowded and competitive than ever. You know that when a prospect is talking to you, they’re also talking to your competition. And somewhere in the negotiation, that prospect is going to ask you for a discount.

And so you think “If this customer is willing to offer their solution at that price, I can too, or even a little lower. Just to win the business.” The problem is, once you start down this path, it’s almost impossible to get off it.

You’ve positioned your company as being the cheapest solution, rather than the most valuable.

Want to get better at handling discount requests and other objections? Get our free objection management template!

When you offer discounts, that’s all people think about your company. We’ve seen this exact situation happen in the consumer goods space. The market gets so crowded and undifferentiated that customers will only pick either the cheapest option or the brand they know and trust.

In SaaS, the only way to win on price is to be free. And you can’t build a company like that.

Instead, I truly believe the winning SaaS companies of today and tomorrow will win on value and they’ll win on brand. And you can’t have either if you’re just trying to be the cheapest.

Discount culture creates a weak sales force (and a weak brand)

When you give discounts, you’re setting the wrong example for your team. Instead of going out and selling on your solution’s value and your brand, your salespeople will become transactional. They’ll just give the prospect information and then offer them whatever they want.

Worse than that, your sales team will start offering discounts without even being asked! I’ve seen this happen so many times at SaaS companies and it drives me crazy.

A sales rep is talking to a prospect, they qualify them, there’s a match, they can really deliver value. And when the prospect asks about pricing, the sales rep preemptively goes: “Well, this is our price. But I would give you a good discount.”

Wait a minute. Nobody asked about a discount!

This is a weak sales culture. Your sales reps will always use the easiest tools available, and when they see discounts being given they’ll start to abuse them. They’ll start to think: “Everybody thinks everything is too expensive. Every buyer wants the cheapest, so before they ask, let me just tell them I’m going to give them a discount.”

All of a sudden one of the most vocal voices of your brand—your salespeople—are weak. They’re cheap. And that’s going to reflect on your brand at the end of the day.

You can’t scale because you don’t know what a customer’s actually worth

The other huge issue with discounts is that they make your business completely unpredictable and unscalable.

Instead of a Basic, Pro, and Business plan where you know how much revenue you make for each, you’ve got Customer A with a 12% discount, Customer B with 14%, and Customer C with 2 free user accounts. Good luck trying to build models or forecast your future revenue or even figure out what’s going on with churn.

Those discounts are going to undermine your entire financial structure because you don’t know what a customer’s actually worth. If they remove or add seats, you have no idea what that means in true revenue or churn.

It’s going to cause problems for your support team, your success team, and your marketing team. Even your product people are going to get angry because they’ll have to build all these backend solutions to keep track of billing on all your different discount cases.

You’ll piss off your customers when they find out you’re charging them more than others

Let’s say a slightly larger company aggressively negotiates a big discount. A few months later, a smaller company comes are your sales rep says “this is the best discount we can give. I can’t go any lower.” I guarantee at some point your customers are going to talk to each other. And when they do, the second customer is going to be pissed.

And rightfully so. You lied to them. You betrayed them. And they have every right to get loud and aggressive and drag your brand through the dirt and tell everyone they know about how terrible you are.

This doesn’t mean you can’t give discounts. You just have to do them right.

If you’re just giving our discounts willy nilly, you’re going to get burned. You’re going to destroy your brand, piss off your customers, and create more headaches than that little bit of extra business is worth.

But this doesn’t mean you can’t give out any discounts. You just have to make sure when you do, you do these two things.

First, make sure you’re getting something in return

The problem with discounts is they create abusive customer relationships. Your customer comes in, demands a bunch of things, and you give it to them just for a bit of business. Instead, you need to ask for something in return. This creates a healthy, reciprocal relationship.

In SaaS, that means asking for:

    1. Prepayment: When a customer agrees to sign a long-term contract or prepays for an entire year, you can absolutely give them a discount. You get guaranteed income and predictable cashflow and they get a break on the monthly price. We offer customers of our inside sales CRM a 10% discount if they pay annually instead of monthly.
    2. Case Studies: Trading a bit of a discount for marketing materials is also a good deal. Feel free to offer a discount if a customer is willing to spend a few hours on the phone with your sales team to make a great case study and do some co-promotion.
    3. Referrals and reviews: You can also offer discounts for connections and leads. Ask for a positive review on a specific platform or give discounts if they connect you with other people in the industry who could be strong prospects.

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Second, make sure your discounts are standardized

If you are giving out discounts, you can’t have any flexibility or offer customization. Your sales reps can’t just give them out however they want. You need to have set, predetermined discounts for each of the deals you’re offering.

For example, you could offer 10% for a case study, 15% for prepayment, and 20% for a referral that leads to a new customer. That’s it. There’s no 12% or free seats on offer.

But Steli, what do I do if a customer says they’re not going to buy if I don’t give them a bigger discount than I want to?

There’s always going to be someone who wants more. But you have to draw a line in the sand.

If they’re not willing to work with you, they’re most likely not your ideal customer. At Close.io, we’ve told thousands of businesses “No” when they asked for bigger discounts.

And you know what’s funny? They all get angry. They all scream and yell and tell you there’s no way in Hell they’re going to buy from you at that price. But in my experience, about 50% of the time, they become customers anyways.

It’s just the way they negotiate. They’re trying to get the best deal for their business and you have to respect that. If you have a strong brand and can show the value you provide, there’s a very good chance they’ll choose you anyways.

Of course, there’s one big exception to all of this: Enterprise

As you can tell, I’m sick of seeing discount culture in SaaS companies. But there is one big exception.

If you’re selling to enterprise clients, the way you handle discounts is going to be completely different. You can’t just give them a price and say “this is what it is,” because that’s just not how they work.

Most enterprise companies have a procurement department whose entire job is to get discounts. They have a discount quota to meet, and if you won’t play ball, they’re not even going to consider you.

That’s just the way their organization is built and you’re going to have to go with it if those are your ideal customers.

If you’re trying to win with discounts, you’ve already lost

If you don’t value your solution, your customers won’t either.

So, if you feel like you absolutely have to offer some sort of discount, make sure:

  1. They’re standardized (and don’t budge!)
  2. You’re getting something equally as valuable in return

Sell your prospects on value first and make the discount an added bonus. Not only will this give you a stronger brand, but it will set you down the right path for real, sustainable growth.

If everyone who reads our articles and likes it, helps fund it, our future would be much more secure by your donations – Thank you.

 

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Feel More Valuable: 3 Ways to Raise Your Self-Worth – David Meltzer

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Whether in business or your personal life, feelings of unworthiness can hamper your ability to shine. When we don’t perceive ourselves as worthy, we tend to self-sabotage and avoid going for (or asking for) what we deserve.

My good friend, entrepreneur Ed Mylett, shared an idea with me that I thought was extremely powerful. He described different things in our lives that have a thermostat: our financial success, weight and especially our self-worth.

The premise is simple. Even if your self-worth increases or decreases a few degrees, or you experience a tremendous change over time, you will eventually revert back to whatever your internal success thermostat is set at. This begs the question: “What can I do to raise my internal thermostat?”

1. Provide value and feel valuable.

The first and best way to improve your feelings of worthiness is simply to provide value to others; be kind to others as well as to your future self. Be of service, which means providing value with no expectations of receiving anything in return. It contains the requirement that you give unconditionally. Giving with expectation, as my friend Bob Proctor says, is trading and not real giving.

It’s essential to have both focus and intention on what we want, in order to get it. And it’s difficult to manifest what you want without being of service to others. Providing value by being of service creates a void that the universe will fill for you.

Giving not only makes you feel good, but this altruistic act is contagious. Giving makes you happy, makes the person who receives happy, and even those who witness giving become happier.

A study tracking 2,000 people over a five-year period, found that those who described themselves as “very happy” were the ones who volunteered 5.8 hours per month, on average. Providing value for others made those individuals feel valuable themselves.

2. Keep your promises.

Part of being of service is keeping promises that you make to yourself, as well as what you promise to others. Living up to your promises builds trust from others, and confidence in yourself, which leads to a better perspective of your worth. When you set achievable goals and put plans in place to meet them, you’ll experience a higher rate of success and simultaneously turn up your worthiness thermostat. You need goal setting (and promise keeping) to be a consistent, persistent behavior, which will then allow you to enjoy the pursuit of your potential by creating objectives and meeting them.

One of my favorite examples to demonstrate this idea involves working out. Many people try to go “all in” immediately on new exercise regimes. I take an alternative approach. I set the bar very low at the start.

The first day that I started working out, I made a promise to myself that I’d put on my workout shoes. That was it. But, that first day, not only did I put all my gear on, but I actually ended up doing 30 minutes of cardio and stretching; I felt great afterward.

The next day, I wanted to increase my progress. I set a goal to put on all my workout clothes. But, once again, I made it to the gym and overachieved even more.

By keeping simple promises like these, and then going above and beyond, you not only build confidence in yourself but also your ability to follow through. You feel good that you are an achiever, and you feel worthy and capable of even greater achievements.

3. Accountability means knowing you’re worthy.

Living with accountability is yet another way to improve your feelings of self-worth. Accountability gives you the power or control over everything in your life. Accountability means that you don’t live in a world of blame, shame or justification. Rather, you take on all challenges as an opportunity to learn and grow.

People who are accountable ask themselves two questions when those challenges arise:

  • What did I do to attract it to myself?
  • What am I supposed to learn from it?

The tendency of people to go “below the line” stems from the impulse to defend their ego. But, in reality, they’re just avoiding accountability. Going below the line is a guaranteed way to lower your thermostat.

Whenever you can, invite others to help keep you accountable. Whether it’s a spouse, a coworker or a coach, ask them to make sure that you stay on track with achieving your goals.

If you cannot find a group or someone you trust to help keep you accountable, keep track of your words and actions yourself. Journaling is an effective way to do this. Just make sure to be honest with your evaluation of your performance.

4.Raise your thermostat.

If you want to make a lasting improvement to your self-image and raise your thermostat of worthiness, embrace the principles of service, keep promises you make to yourself (as well as to others), set realistic goals that you can achieve, but keep raising the bar. Finally, take charge of your life by being accountable and living above the line of blame, shame and justification.

These strategies are well worth your time if you want to build your self-worth, feel like you are deserving, and consistently, persistently, rapidly attract the great things that are coming your way.

If everyone who reads our articles and likes it, helps fund it, our future would be much more secure by your donations – Thank you.

 

How to Attract the Right Clients – Steve Cartwright

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It took me many years to learn the lesson that when it comes to freelancing, there are two types of clients only, the right clients and the wrong clients. When you have the right clients the world seems wonderful, work seems exciting, and you don’t dread checking your emails and messages. But, if you have the wrong clients, you suddenly start checking the “Want Ads” for jobs and dread those emails coming in. Since no one wants to work with such stress and especially if you work for yourself, the answer is to only work with the right clients. But, how can you be sure that you’re attracting the right clients?

Determine Who Exactly Your Ideal Client Is

Write down what your ideal client looks like. What motives them? What keeps them up at night? Are they results-focused on money-focused? All of these questions can help you determine the type of client you want to attract. As a freelancer you should focus on clients who have a specific need, who care more about results than price, and who are willing to hand over the work to you and focus only on deliverables – i.e. no micromanagers.

Set Your Prices High

Instead of trying to compete on price, compete on value. Price your value instead of trying to match your competition or freelancers who want to compete on price. Remember that your prices set an expectation in the minds of your audience. The higher the price, the more perceived value they have for your services. If your prices are currently low, raise them right now. Don’t be scared; you’ll attract clients who are successful instead of struggling, which will give you a much better type of client.

Do Not Lower Your Prices

When you get to the negotiation phase, never lower your prices. You can add more value into your work for the price, but don’t lower it. You’re not selling a commodity; you’re selling a specialized skill that took you a lot of time, money and training to be able to offer it professionally. Do not under value yourself. No matter what your competitors charge, you should stick to the value you set at the beginning. Lowering your prices only sets you up for failure and resentment. Let your clients know that you never cut prices or corners.

Set Up a Client Screening Process

Your potential clients need to go through a process that qualifies them before you ever speak to them on a call. Set up a client questionnaire that will not only help determine what type of client they are, but also help them clarify what it is they want from you. Clients who know what they want are a lot easier to work with than clients who have no idea what they want. Plus, if they are willing to go through the questionnaire, that is a good sign they’re going to be willing to use your processes and your systems.

Determine Your Potential Client’s Motivation

Most business owners literally guess about their clients’ motivation, and due to this are often wrong. When you can figure out what truly motivates your clients, you’ll be able to improve on your client screening process exponentially. The truth is, the only real way to qualify a client is to know what gets their engine burning. Put these into your client screening process and you’ll start figuring it out.

In the form you create to screen potential clients, simply ask what motivates them. Give them the choices of: Speed, Value, Price, Results. You can have them choose one or rank them in terms of importance. This does a few things. If they fill out the form, you know they’re serious; if they answer price and speed as most important, you can toss them out as potential clients, or you can move them to a new list that educates them on value and results over price.

Focus on Results

The more value you can provide, the better. What your clients really want is results. If you can prove the results, your clients will be clamoring for more at any price. Determine a way to prove the results of your work, and then submit that information to your clients on a periodic basis with notes on what more can be done (at a price) to improve these outcomes even more.

Place a Premium on Value

You’ve likely heard the phrase, “under promise and over deliver”. It’s excellent advice and something you should focus on doing. The more you can do that, the more your clients will perceive your work as top-notch and excellent – no matter the price. Each month that you work with your client, always figure out a way to do a little something extra that you didn’t list in your duties just to give them that wow factor.

Follow Up

One of the biggest keys to keeping your business afloat and working with the right clients is the follow-up. When you’ve received objections from clients that you know would be a good fit, you want to address them immediately. For example, if a potential client went through your entire process but still is on the fence due to the cost, you’ll need to step it up. Give them more testimonials, references, and examples of the results of your work.

All of this may seem like a lot of work, but if you don’t put potential clients through a screening process before you get to the first phone call, you will more often than not waste your time. It can be scary to stick to your price point, but it’s imperative if you want to be happy doing this work and working with these clients. Oh and if you make a mistake and accept a client that you later find out isn’t right for you, then never be afraid to sack the client, working with the right clients ensures you do your best work after all.

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