When and How to Give Discount in SaaS Game?
Everybody wants a deal
But there are both downsides and benefits of it.
Downsides: Do not forget, that discounts are the laziest path to customer conversion.
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Discount-dependant growth
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Risk of degrading buyers’ perception of the value
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A bad reputation as a “cheap solution”
Benefits:
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Drive your win rate
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Shorten sales cycles
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Keep a customer happy
There are a variety of reasons behind the discounting requests, some examples:
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Competition
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Real Budget Constraints
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Company size: Enterprise vs Longtail
That’s why value selling is the only remedy.
What to do when your customers ask for a discount?
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Qualification of the discount request — Understand: Is your prospect using “your offer” to get a better price from another vendor?
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Understand: Do they really need the discount? Or they just ask it for the sake of asking
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Identify a Bad vs. Good Discount Request
An example of definition, If the customer is unwilling to commit to anything in return for a discount — A bad request
If the customer is open to negotiation to give and take — A good request
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Use discounts strategically to both bring down sales cycles and increase the # of deals that close.
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Find out the reason, ask “why?” in a polite way to identify if there exists a “Value Problem” or “Budget Restrictions”
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What would be a reasonable discount? Ask to understand the gap
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Ask questions to confirm that the price is the only obstacle
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Use your weapons such as “flexible payment” or “free trial” — whatever perks you are offering
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Be ready for the “quid pro quo” exercise! What will you get when you give the discount? Upfront payment, longer contracts, or referrals can be good examples
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When selling to enterprises, sometimes you need to provide discounts to two different parties:
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The champion that’s driving the purchase
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The procurement agencies that receive a bonus based on the discount amount they get
Be ready not to face last-minute surprises :)
Bonus: Let’s remember Jason Lemkin’s words:
