Most companies will inevitably encounter a situation where a customer requests a discount. In a competitive environment where customers are becoming more informed and demanding, it is necessary to develop strategies to help companies respond effectively to such requests.
In this article, we will take a look at the TOP practical approaches and tips for managing such situations and achieving mutually beneficial results. Whether your company is a small business or a large corporation, you’ll find valuable TIPS to help you better understand how to respond to customer requests for discounts and achieve satisfaction on both sides.
Reasons why customers ask for a discount
Is your client negotiating for a discount until the last minute? You don’t want to lose them, but you also don’t want to give in too easily. What should you do in this situation? First, you need to understand why they are asking for a discount and what is motivating this behavior.
There are two types of customers:
- the first type will agree to any reasonable price to achieve their desired outcome,
- while the second type is more focused on cost and places less emphasis on the project’s development.
Cooperating with the second type of client is more expensive in the long run due to their tendency to negotiate excessively. It is advisable to evaluate the necessity of working with such clients and calculate the risks involved before offering discounts. We are only interested in clients who haggle at the last minute because they prioritize price over project results. This approach is fundamentally flawed.
Do not give in to a customer’s request for a discount. Instead, propose alternative terms. Do not give in to a customer’s request for a discount. Giving in once will only encourage the client to push for more concessions, even after the contract is signed.
Reasons why clients may refuse to pay include:
- lack of funds,
- uncertainty about the product/service,
- negative experiences with similar companies,
- and greed.
How to deal with customers who ask for a discount
Next, let’s understand how to negotiate with clients in each case.
If “No money.” The recommendation is to wait for it. The most risky option is to enter into business relations without advance payment. It is necessary to assess each situation individually because such a transaction can seriously harm the company and cause financial damage. Some may offer installments or credit, but remember that one bad deal for a company can seriously undermine its viability and sustainability.
“If you have the money but no desire to risk it.” It means an insufficiently formed need for your service and a need to understand your solution’s value to the client’s business. It would help if you worked with the selection criteria and the relevant benefits with a proof base. For example, show how you have solved similar problems for other clients and how their lives have improved after working with you. Project examples are usually the most persuasive.
“There’s money, but there’s a bad experience.” In this case, you can offer a pilot project or a trial period with mandatory service payment. If the parties are satisfied with the result, continue the cooperation and sign the main contract. Providing contacts and recommendations of satisfied clients to get feedback directly is also not superfluous.
“Too cautious in the choice”. In this case, finding the primary and hidden needs is necessary. We prepare an appropriate proposal and leave the client with his thoughts. A little later, we contacted him and clarified what other information he needed to make a decision. He may be compared with competitors, in which case we can help him reach you objectively on the criteria that are important to him. We should only sell a service or product that meets customer expectations. Otherwise, we will only get a negative experience and ruin our brand’s reputation.
“The customer is greedy and sure, you can be pressured to save money. In this case, we have to determine the acceptable offer level for us to maintain profitability and interest in the project. If you will give a discount, offer a quid pro quo – reduce the package, require full payment in advance, or extend the project timeline. Remember, you are in business, too; your benefits and interests are equally important.
Case histories for each situation requesting a discount
Here is the story. A client approached us without money to start the project. He was an individual entrepreneur who had just started his own business in the field of home renovation and promised to pay for the services out of his profits. We had to refuse, as a scheme in 9 out of 10 cases promises losses and wasted effort on the project.
The second case was related to a client who had a budget for the project, but the company was not ready to invest funds because it needed to understand the value of our services. It was a warehousing company. We managed to convince the client to sign a contract with us by presenting the projects and results of similar companies. As a result of our cooperation, the company increased its warehouse space four times in 2 years, as well as its profit and sales.
The most common category of clients who turn to us for a marketing solution are those who have had negative experiences. We started working with a self-storage company after its competitors had duped it into selling a magic robot (script) that would bring mountains of gold. We convinced the client to trust us after a detailed audit and breakdown of the monthly work they were paying for. As a result, we have been working together for 9 years now and have helped them achieve record sales in their history.
We are often approached by companies that have a dozen similar marketing agencies to choose from. One such company was a vocational training center. We convinced the client with a detailed advertising strategy, calculation of results, and risk assessment. As the client later admitted, we were the only marketing agency that had worked out the advertising strategy for them in such detail.
If you have money but are trying to squeeze for maximum discounts, it is better to limit the list of services and know in advance the marketing budget you need to fit.
Top 5 responses to a customer’s request for a discount
When a customer asks for a discount, it is essential to consider several factors, including company policy, pricing strategy, customer attitude, and specific circumstances. Here are some possible responses:
Explain company policy: “Thank you for your interest in our products/services. Our company has a strict pricing policy to ensure high quality and competitiveness. At this time, we are unable to offer a discount. However, we can make you aware of our current offers that can save you money”. It works great when you must steer a customer away from a discount on a specific product/service and offer them savings in other ways.
Offer a value-added alternative: “We understand that price is important to you, and we want to give you the best value for your money. Instead of a discount, we can include additional important services such as free installation, extended warranty, or free service for some time. It allows you to get more value while keeping the overall cost reasonable. It is a great way to “top off” bonuses with a customer’s desire to save money.
Sale or promotion: “We are currently running a sale/promotion that may interest you. When you purchase a selected product/service, you will receive free shipping or a discount on additional products/services. We encourage you to take advantage of this opportunity to maximize your purchase — a great way to satisfy a customer’s desire to save money and increase the average sales check.
Offer flexible payment options: “We understand that price can be an essential factor in your decision. We can offer a flexible payment system that allows you to spread the cost over several payments or provide a deferred payment option. This way, you can now get the product/service you need without breaking your budget.
Offer a referral program: “We have a referral reward program where you can get a discount on your purchase if you bring a new customer to us. Tell your friends or colleagues about us, and you can enjoy the benefits of our referral program. Everybody wins – you get a new customer that you’ll pay for one way or another. It is a potent business development tool.
We’ve covered several strategies and approaches to help companies manage these situations and achieve mutually beneficial results, as well as personal case studies and the consequences of our decisions. Discounting is sometimes the only way to satisfy a customer’s request. By offering alternatives such as additional services, sales, or personalized discounts, we can create more value for the customer and meet their needs.
The key to successfully negotiating a discount with a customer is to be flexible and understand the reason. Listening to the customer, understanding their needs, and offering a solution that benefits them and the company is essential. As Zig Ziglar said, “You don’t get a second chance to make a first impression,” so being responsive to customer requests and willing to go the extra mile can be vital to retaining customers and building long-term relationships. But remember, this doesn’t have to be at the expense of your business. You are the customer, too, and you are in business, so take a win-win approach.
As Geoffrey James said, “Customer satisfaction begins with service excellence. Be willing to adapt, look for creative solutions, and strive for happiness.
Working with discounts is an opportunity to meet customer needs and a strategic tool to grow your business. Properly using alternatives, customized offers, and flexible payment terms will allow your business to thrive.