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WHAT TO DO WHEN THE CUSTOMER ASKS FOR A DISCOUNT: 8 CASES AND A SIMPLE SOLUTION FOR EACH OF THEM
Alexandra Shiryaeva
Chief Customer Officer at Usedesk
You are too expensive. Another company offered me a lower price yesterday. Moreover, you know what, other companies offer a free delivery for that price. I'm a mother, I have children. And what do you know about budgeting? Does it mean that I just wasted my time advertising you in Facebook?
We see and hear it every day. Every single day, someone asks for a discount. This is a hot topic, and it exists forever, therefore, the best thing you can do is to get ready for the attack and plan your reactions. Well, to surrender, or to defend the positions: that is what we are going to discuss now.
We will start by defining the types of the customer who ask for a discount. This will allow us to have the maximum coverage and create a universal approach that almost any company can adopt.
Note: all customer characters are the products of the author's imagination, and any resemblance to actual persons is purely accidental. No customers were harmed in the writing of this article. Some even have received the discounts.
We see and hear it every day. Every single day, someone asks for a discount. This is a hot topic, and it exists forever, therefore, the best thing you can do is to get ready for the attack and plan your reactions. Well, to surrender, or to defend the positions: that is what we are going to discuss now.
We will start by defining the types of the customer who ask for a discount. This will allow us to have the maximum coverage and create a universal approach that almost any company can adopt.
Note: all customer characters are the products of the author's imagination, and any resemblance to actual persons is purely accidental. No customers were harmed in the writing of this article. Some even have received the discounts.
Loyal, long-term customer who always pays on time
The most blessed thing that can happen to a company regarding customer service just has such customers. He has been with your company for a long time; he has been there during your ups and downs. He knows the strengths and weaknesses of the product. He is willing to forgive your shortcomings, and he praises your strengths to colleagues and friends. Over the years, you have built warm relations.
What to do: never leave these customers unattended. Do not reject to give a discount saying you cannot do this. First, find out why all of a sudden he has asked for a discount. As soon as you know the reasons, it becomes clear how to react. If they expand their business and now need to buy more from you, then agree to discounted prices and work on other options to propose better prices. The customer will appreciate it; he will bring friends. In case the customer's budget was reduced for some reason, he just cannot allow the products for the current price, then look for an offer that the customer can accept; otherwise, you may lose the customer. In another case, the customer just realized that he deserves a discount given a long-lasting partnership, then weigh all the pros and cons. In practice, it has shown that the customer stays with you in this scenario regardless of the discount. Such a request for the discount is more like a "wish" rather than a "necessity."
If you offer a discount to such a customer, the level of loyalty will grow, and later you will be justified to have tiny mistakes (malfunctions, bugs, overlays, and others). More precisely, there will be a limited amount of errors that are guaranteed to be forgiven.
In brief: investigate the details related to the customer, figure out his motivation and payment history. Do not be afraid to lose money but be afraid to lose the customer. A new, potentially large, and profitable customer
What to do: never leave these customers unattended. Do not reject to give a discount saying you cannot do this. First, find out why all of a sudden he has asked for a discount. As soon as you know the reasons, it becomes clear how to react. If they expand their business and now need to buy more from you, then agree to discounted prices and work on other options to propose better prices. The customer will appreciate it; he will bring friends. In case the customer's budget was reduced for some reason, he just cannot allow the products for the current price, then look for an offer that the customer can accept; otherwise, you may lose the customer. In another case, the customer just realized that he deserves a discount given a long-lasting partnership, then weigh all the pros and cons. In practice, it has shown that the customer stays with you in this scenario regardless of the discount. Such a request for the discount is more like a "wish" rather than a "necessity."
If you offer a discount to such a customer, the level of loyalty will grow, and later you will be justified to have tiny mistakes (malfunctions, bugs, overlays, and others). More precisely, there will be a limited amount of errors that are guaranteed to be forgiven.
In brief: investigate the details related to the customer, figure out his motivation and payment history. Do not be afraid to lose money but be afraid to lose the customer. A new, potentially large, and profitable customer
A new, potentially large, and profitable customer
He slowly drives his Tesla into your office. Ladies are screaming and go crazy, imagining a significant investment. You've got an email from him earlier that day. Inside of that email, you found the mountains of gold, future joint wins, the details of what his company achieves in 5 minutes, and the potential of incredible future growth. Together with you, of course. Diamond sparkling makes it hard to see the display of your monitor. That is him! The customer that is so good and potentially desirable for you that it seems you have to pay him for cooperation.
What to do: first, do not let it trick you. The customers tend to overestimate their importance. Before you offer special prices and discounts, think about the real profitability of the cooperation. Do not be too persistent. It is easy to lose the customer because of the bureaucracy and stiffness, and it is tough to get the customer back afterward. If you are interested in the proposed trade volumes or in having the customer's name on your portfolio, you'll have to work hard. By the way, he also will likely try to demonstrate his worthiness, and you can catch him doing this. Your offer for a discount should have a basis, don't give a discount right away but suggest changing in price depending on the actual volume (wholesale, long-term subscription to a product or service, etc.). Thus, the customer needs to be familiar with the game rules, where he feels like a valuable partner.
Show the customer's value by attitude: when you get back with an offer, briefly mention that it was hard to come up with that offer. You spent time persuading the accounting team and singing the serenades to the manager. You did all of it to offer this discount for him. After these words, he can't refuse the prices as you put so much effort into it.
In brief: tie a discount to the purchase volumes. To consolidate the intentions, present a discount like the mammoth you caught with your bare hands in the middle of the MKAD (Moscow Central Ring Road). Amazing VIP who knows your second uncle
What to do: first, do not let it trick you. The customers tend to overestimate their importance. Before you offer special prices and discounts, think about the real profitability of the cooperation. Do not be too persistent. It is easy to lose the customer because of the bureaucracy and stiffness, and it is tough to get the customer back afterward. If you are interested in the proposed trade volumes or in having the customer's name on your portfolio, you'll have to work hard. By the way, he also will likely try to demonstrate his worthiness, and you can catch him doing this. Your offer for a discount should have a basis, don't give a discount right away but suggest changing in price depending on the actual volume (wholesale, long-term subscription to a product or service, etc.). Thus, the customer needs to be familiar with the game rules, where he feels like a valuable partner.
Show the customer's value by attitude: when you get back with an offer, briefly mention that it was hard to come up with that offer. You spent time persuading the accounting team and singing the serenades to the manager. You did all of it to offer this discount for him. After these words, he can't refuse the prices as you put so much effort into it.
In brief: tie a discount to the purchase volumes. To consolidate the intentions, present a discount like the mammoth you caught with your bare hands in the middle of the MKAD (Moscow Central Ring Road). Amazing VIP who knows your second uncle
Amazing VIP who knows your second uncle
You owe him a discount just because he uses your product. By the way, yesterday, he visited Vasya and wondered how Masha's health was. Masha asked to say hello to you! Well, ok. This is VIP. He has connections, acquaintances, and self-esteem, which does not allow him to be unnoticed.
What to do: be calm and friendly. Accepting the requests of such customers means putting yourself into discounted bondage forever. This will not end with just a one-time offer. Every time he asks for a discount, he accompanies this with threats to ruin your reputation or, slamming the door, he shouts that he is going to move to the competitors. Do not believe it, and do not worry. Explain that you understand his concerns, and you agree with his opinion, but you do not have any financial power. Replace the discount with genuine care (moral or material care): provide VIP support, come to him with the team training, ensure the special delivery conditions, or send him postcards with kittens in hats weekly.
In brief: nourish his self-esteem. Impress him with individual treatment and inventiveness. As a result, you will have a happy customer and good reviews.
What to do: be calm and friendly. Accepting the requests of such customers means putting yourself into discounted bondage forever. This will not end with just a one-time offer. Every time he asks for a discount, he accompanies this with threats to ruin your reputation or, slamming the door, he shouts that he is going to move to the competitors. Do not believe it, and do not worry. Explain that you understand his concerns, and you agree with his opinion, but you do not have any financial power. Replace the discount with genuine care (moral or material care): provide VIP support, come to him with the team training, ensure the special delivery conditions, or send him postcards with kittens in hats weekly.
In brief: nourish his self-esteem. Impress him with individual treatment and inventiveness. As a result, you will have a happy customer and good reviews.
"Others are cheaper"
Comparing you with your competitors regarding pricing is one of the favorite things to do by the customers. I cannot blame them for this. Sometimes, comparison serves useful purposes. The customer plays a sort of Russian roulette: he either has a real intention to leave from you or simply checks the boundaries. Then, everything goes in the same way as in a real-life — if you want to make something happen, you just do it without announcing.
What to do: hard to resist such an argument as it is backed by logic. Instead of saying, "Well, ok, just go," you can try to enhance the level of communication. If the customer reached out to you regarding competitors' prices, that means he is open to a conversation. Always figure out which companies he takes into account, learn what the competitors offer and you don't. Often, it turns out that the competitors' low prices can be explained by limited functionality or poor service, and you offer a much better product. Find out the priorities for the customer and work with them – whether it is the price, stability, assortment, quality, some specific features, and so on.
If the competitors he mentioned do not have what you have, tell him about it and justify why you are more expensive. If all of these are important for the customer, they will not leave because the competitors do not meet their needs.
If it's only a price that matters, offer the customer alternatives to save money: a referral program, a discount for large purchase volume, upcoming promotions, and so on. Do not try too hard to keep the customer and do not offer a deal right away. There is always someone cheaper, and you will never win this race.
In brief:
Find out what are the companies that you are being compared with.
Explain to the customer why you are more expensive.
If it's only a price that matters, try to find a way to offer a discount but do not give it directly to prevent endless dumping.
A customer with a limited budget, everything is expensive
What to do: hard to resist such an argument as it is backed by logic. Instead of saying, "Well, ok, just go," you can try to enhance the level of communication. If the customer reached out to you regarding competitors' prices, that means he is open to a conversation. Always figure out which companies he takes into account, learn what the competitors offer and you don't. Often, it turns out that the competitors' low prices can be explained by limited functionality or poor service, and you offer a much better product. Find out the priorities for the customer and work with them – whether it is the price, stability, assortment, quality, some specific features, and so on.
If the competitors he mentioned do not have what you have, tell him about it and justify why you are more expensive. If all of these are important for the customer, they will not leave because the competitors do not meet their needs.
If it's only a price that matters, offer the customer alternatives to save money: a referral program, a discount for large purchase volume, upcoming promotions, and so on. Do not try too hard to keep the customer and do not offer a deal right away. There is always someone cheaper, and you will never win this race.
In brief:
Find out what are the companies that you are being compared with.
Explain to the customer why you are more expensive.
If it's only a price that matters, try to find a way to offer a discount but do not give it directly to prevent endless dumping.
A customer with a limited budget, everything is expensive
A customer with a limited budget, everything is expensive
If all the customer has is $100, you cannot expect more than that. If he has chosen you and reached out directly, that means he likes you a lot, but he cannot afford your product. At least, you have to appreciate this impulse immediately and think about it later.
What to do: that customer apriori has loyalty and patience for you. If the difference between the actual price and the amount of money he has does not put you into a deep minus, try to make a mutual agreement. This year's budget is not the same as it will be next year, and with a high probability, it will be bigger than it is now. While the customer does not change, he remains grateful for your flexibility, not paying attention to the product's omissions. Oh, of course, he will recommend you to his friends.
When you offer a discount, it is essential to identify the limits right away. The provided price is suitable only for now; it will be recalculated with the next purchase/subscription renewal and so on. Make it clear for the customer that you are cool and caring, but money is money, and you have your budget limits. By the next payment, he will have enough motivation to meet the regular prices.
In brief: move forward if the budget allows it. Indicate that this is not a permanent discount. A customer with no budget at all (charities and volunteers)
What to do: that customer apriori has loyalty and patience for you. If the difference between the actual price and the amount of money he has does not put you into a deep minus, try to make a mutual agreement. This year's budget is not the same as it will be next year, and with a high probability, it will be bigger than it is now. While the customer does not change, he remains grateful for your flexibility, not paying attention to the product's omissions. Oh, of course, he will recommend you to his friends.
When you offer a discount, it is essential to identify the limits right away. The provided price is suitable only for now; it will be recalculated with the next purchase/subscription renewal and so on. Make it clear for the customer that you are cool and caring, but money is money, and you have your budget limits. By the next payment, he will have enough motivation to meet the regular prices.
In brief: move forward if the budget allows it. Indicate that this is not a permanent discount. A customer with no budget at all (charities and volunteers)
A customer with no budget at all (charities and volunteers)
Many non-profit organizations simply have no money. I mean no money at all. However, they still need you. It can be student associations, charitable foundations, shelters, orphanages, libraries, schools, etc. They often operate at a loss, but they keep doing important and good things for society. Among the customers mentioned in this list, they deserve a discount and a special attitude the most.
What to do: discuss with your financial department your policy regarding such companies in general. For example, in my practice, almost all non-profit organizations were given free subscriptions/services or the maximum possible discount. By the way, it does not have to be one-way help: ask them to write a good review, communicate to the public about the product and how it helps them, take interviews and publish them in your blog or website, publicly announce that now you are also a part of some great and good thing. Your customers will like it, and new ones will want to join the company that is so social-oriented.
In brief: help them, and don't forget to exchange mutual partnership disclosures on websites and social networks. You know that guy — he always asks for something.
What to do: discuss with your financial department your policy regarding such companies in general. For example, in my practice, almost all non-profit organizations were given free subscriptions/services or the maximum possible discount. By the way, it does not have to be one-way help: ask them to write a good review, communicate to the public about the product and how it helps them, take interviews and publish them in your blog or website, publicly announce that now you are also a part of some great and good thing. Your customers will like it, and new ones will want to join the company that is so social-oriented.
In brief: help them, and don't forget to exchange mutual partnership disclosures on websites and social networks. You know that guy — he always asks for something.
You know that guy — he always asks for something.
Time to be honest. This is not the enjoyable type of customers. They stay with you but constantly ask for a discount. Well ... they just ask for something.
What to do: remind about your promotions and referral program, if you have one. Do not offer a discount right away - it will never stop. Such customers only have an initial level of buying potential, their threats are just words, but the behavior can significantly influence the support agent's mood. Therefore, you need to react to their requests adequately, just like you react to the child's requests to get everything he wants. You understand him, you agree with him, but there is nothing you can do. Just say that you have a big and evil financial brother in your company that forbids you to give the discounts. You begged and beat him, but he still does not allow a discount. That's it.
In brief: persistently ignore.
What to do: remind about your promotions and referral program, if you have one. Do not offer a discount right away - it will never stop. Such customers only have an initial level of buying potential, their threats are just words, but the behavior can significantly influence the support agent's mood. Therefore, you need to react to their requests adequately, just like you react to the child's requests to get everything he wants. You understand him, you agree with him, but there is nothing you can do. Just say that you have a big and evil financial brother in your company that forbids you to give the discounts. You begged and beat him, but he still does not allow a discount. That's it.
In brief: persistently ignore.
Mister "special circumstances"
Bad days happen. Sometimes, everything just goes wrong. The customer has lost his wallet and now does not know where to get the money. The mother-in-law insisted she needs help with the dacha, and he had to pay her instead of coming to the dacha. The customers of the customer suddenly delayed the payment, and there is not enough money on the account now. Mercury was in retrograde for a month, and no one remembers why there is no money, but there is no money.
What to do: if you value your relationship and 100% sure that it is a force majeure, follow your moral principles. Ideally, imagine yourself in the customer's position and try to help as much as you can. As a bonus, you can get a viral review on social networks about how cool you are.
In brief: Well, actually, there was not that much money there.
What to do: if you value your relationship and 100% sure that it is a force majeure, follow your moral principles. Ideally, imagine yourself in the customer's position and try to help as much as you can. As a bonus, you can get a viral review on social networks about how cool you are.
In brief: Well, actually, there was not that much money there.
Caution: blackmail and dependency
Whatever the reason to be flexible and offer a discount, remember that the effect is like from a drug. Alternatively, a caramel popcorn. The customer becomes dependent on discounts. If you miss the moment and do not explain (in every little detail) the customer why he received a discount and whether he will receive it in the future (say it right away to avoid misunderstanding), you are at risk:
а) to have a customer that requests a discount and threatens to leave you (at the end, you will give up),
b) to have an unsatisfied customer leaving you without realizing why he had a discount yesterday but not today.
Be consistent and detailed. When you offer a discount, explain why, and tell the customer what will happen with this discount at the next payment.
а) to have a customer that requests a discount and threatens to leave you (at the end, you will give up),
b) to have an unsatisfied customer leaving you without realizing why he had a discount yesterday but not today.
Be consistent and detailed. When you offer a discount, explain why, and tell the customer what will happen with this discount at the next payment.
Farewell words
In the end, brief farewell wishes will help in general.
Scenarios for the customer support team members
Everyone in the team should have a clear understanding of what to do in each case. Add it to the playbooks used within the team and break it down into algorithms, categories, and sequences of actions. Just do everything possible to avoid the mistakes by the team when they promise the customer something extra (or vice versa — to cancel a discount and ruin the reputation of the company). To promise a customer a discount, and then take it away, or cancel a discount for a customer who was about to make you reach – these are mistakes that are very hard to correct.
Record statistics
Collect information about what happens to customers next. After you have offered a discount, has he became more loyal or gave good reviews that brought you, new customers? If you canceled a discount, has he left or stayed with you?
As soon as you begin to track at least some of these cases, you will learn to manage discounts avoiding any damage while having profit.
Alternative ways to save money
Leave yourself and your customers backup plans. Asking directly for a discount is almost a despair. As you cannot always make exceptions, just make your back stronger so you can rely on it: set up a simple and easy referral program, run promotions and contests, offer the discounts for big purchases, figure out ways to give lower prices without discounts (for example, partially include additional features at the same price). Do not stay away — help management, sales, and marketing teams to make the product better.
May customer loyalty be with you.
Scenarios for the customer support team members
Everyone in the team should have a clear understanding of what to do in each case. Add it to the playbooks used within the team and break it down into algorithms, categories, and sequences of actions. Just do everything possible to avoid the mistakes by the team when they promise the customer something extra (or vice versa — to cancel a discount and ruin the reputation of the company). To promise a customer a discount, and then take it away, or cancel a discount for a customer who was about to make you reach – these are mistakes that are very hard to correct.
Record statistics
Collect information about what happens to customers next. After you have offered a discount, has he became more loyal or gave good reviews that brought you, new customers? If you canceled a discount, has he left or stayed with you?
As soon as you begin to track at least some of these cases, you will learn to manage discounts avoiding any damage while having profit.
Alternative ways to save money
Leave yourself and your customers backup plans. Asking directly for a discount is almost a despair. As you cannot always make exceptions, just make your back stronger so you can rely on it: set up a simple and easy referral program, run promotions and contests, offer the discounts for big purchases, figure out ways to give lower prices without discounts (for example, partially include additional features at the same price). Do not stay away — help management, sales, and marketing teams to make the product better.
May customer loyalty be with you.
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