Readers still reeling from my tongue in cheek humor last week on whether discounts work are really going to love me after this one.

Are discounts smart?

Again, yes. And no. 

I think we have to ask ourselves what we’re trying to accomplish by offering discounts. And further, we have to ask if that is the type of buyer behavior we want to reinforce or encourage in both the short and long term.

The case for “yes”

In some cases, discounts are very smart. Take, as an example, the discounts that our online training organization, SalesBasix, offers membership organizations for the purchase of training modules. I believe this is smart because members of these organizations are members for a reason – to receive value for their membership dollars. Members pay dues, attend meetings etc., and as a result of that, they are “entitled” to certain benefits.

I think discounts can also be very smart in cases involving volume. Again, in the example of SalesBasix, we have to go through the same steps and we have the same technology infrastructure in place for one person buying one module as for multiple people purchasing multiple modules. So volume makes sense.

It also makes sense in that we seek to help membership organizations provide value to their members. So, to the extent we can do that – while simultaneously helping members by providing knowledge and information to sell and market their businesses better – then everyone wins. And that is always smart in my opinion.

The case for “no”

But what about some of the other examples I brought up last week? “Cash for Clunkers,” for example. Was this “smart.” I know the government did it to help kick-start the economy. Did it work? That depends. Auto sales had a brief blip upwards due to this incentive, but subsequent month sales dropped like a rock. Most economists agree that it took months’ worth of auto sales that would have occurred anyhow and compressed them into a shorter time period. So in that sense it didn’t work, nor was it smart, because there was no long-term positive impact, nor did it kick-start anything.

I think something that tends to get lost in all these discussions is the reason a company is in business. Contrary to some popular belief, companies don’t exist to employ people and pay taxes. Companies exist to make a profit. There is a cost to producing everything, and a price at which the market will allow you to sell it. If a company can’t sell something for more than it costs to produce, then it will cease to be a company. (Government bailouts notwithstanding.)

So as long as a company can sell something for more than it costs, and the profitability of selling it is worth the risk and work, and discounts help drive those sales when needed, then yes, I think discounting is smart.

But you have to be mindful of the long-term impacts of these decisions. The auto companies are a great example, but there are other examples, as well.

Would you ever buy anything at Art Van unless there was a sale going on? Is there ever not a sale going on at Art Van? I think not. So what has this caused? Millions and millions of advertising dollars spent on promoting discounts that never go away? Seems to be smart for the advertising companies but is it smart for Art Van?

The bottom line, I think, when it comes to answering the questions of “do discounts work” or “are they smart,” is, “it depends.” What is your goal and what are the long-term implications of the policy? If all that is considered and due diligence is done with respect to historical examples of what you are contemplating (so you will know where you will end up) then perhaps yes, perhaps no.

Brian

The great debate about discounting is one in which I have been engaged for many years. My colleagues are firmly entrenched on both sides of the fence, so we would invite and welcome your thoughts on the topic.

My personal take is that discounts do not work. I say this because I cannot think of a single thing I purchased solely because it was discounted. That being said, I will admit to the fact that I’ve been delighted to receive discounts for things that I’ve already decided to purchase. But I didn’t make that decision just because they were discounted.

So maybe we need to define what we mean by “work.”

If someone is considering a particular purchase, but it is beyond his or her budget, and then an applied discount brings it into budget and it’s purchased, the discount worked. Likewise, if someone has a preconceived price point or range they are willing to pay for something and then a discount brings the price within that range and the purchase is made, then I think it works.

Are there scenarios other than these where discounting “works?”

I think it is safe to say that, in those scenarios, the discounts allowed for or incentivized the purchase by eliminating barriers. But, if there wasn’t a need or desire to purchase before the discount was offered, then I don’t think the discount worked to create the need or desire.

The most famous (admitted) discounting blunder of our time was conceived by the U.S. automakers when they implemented “rebates.” They have worked every day since launching this concept trying to reel it back in. Why? Because the rebates didn’t cause someone to buy a new car, they just made it easier to buy something someone was already going to buy.

(This is much like credit, which, incidentally, was opposed by Henry Ford, but that’s for another post.)

The rebate program created “rebate addicts” among U.S. auto consumers, and led to many unanticipated consequences such as the outsourcing of jobs to low-cost countries so the automakers could continue to drop prices even further. You got your rebate but lost your job. So how is that working for you?

This Wal-Mart mentality has infiltrated our culture. It has had an impact on how consumers view pricing and value. Corporate discounting and incentives “feed” this culture to the point where almost no one will buy anything if it isn’t discounted.

Even the U.S. government got into the game with “cash for clunkers,” then “cash for caulkers.” Did these programs “work?” Sure did. Everyone who was going to buy a car later in the year purchased a car sooner. Same with caulkers. The programs worked because they incentivized a purchase of goods that would have occurred anyhow.

So, no. On the other hand, they did not work.

So, we’re back to where we began. Do discounts work? Well … yes, in the sense that it seems like nothing is offered or purchased without a discount or incentive these days.

OK. I’m off the fence and all behind discounts. I talked myself into it.

I need to close out this post so I can get with my partner to raise all of our pricing by 10 percent. That way, we can discount it by the same percentage in order to incent purchases.

Such a deal!

Brian

P.S. You know that everyone does this, right? Of course you do. So why does it still work? I don’t know. Please tell me!

As a sales or marketing professional – indeed, as any kind of professional – you’ve probably come to understand that you’ve got to drive your own career; you are responsible for your own success.

And as a sales or marketing professional, you probably also understand the best way to do that is to consider yourself the “product” being brought to market. As with any go-to-market strategy, public relations principles and tactics can provide significant support.

For example, if you were your own public relations client, you would stand to gain from the development of strategic messaging. You also would probably expect some publicity for your work. There’s more, too, but let’s start with those two topics.

Strategic messaging

As you interact with others in the marketplace (such as at meetings, during sales calls and at networking events), what are your key messages? I‘m not referring to the key messages associated with your product or service, the things that you communicate as part of your job. I’m referring to the messages about yourself, and the way you communicate them.

For example, maybe one of your key messages is: “I am a professional engaged in continuous self-improvement.” You probably wouldn’t articulate it as such, but you may, for example, work into a discussion with colleagues the latest business book you read, your thoughts about it, and the ways it’s relevant to their business.

Publicity

The first rule is, before you can be recognized for something, you have to achieve something. Simple? Sure. But think about how many people you’ve known through the years who try to get something for nothing, who are so self-absorbed they fail to realize their lack of achievement.

So, for the purposes of this discussion, let’s say you’ve earned a prestigious award. There are numerous ways you can leverage the honor. Does the group or organization that provides the award do a press release on it? Create a link to the release on your Facebook and LinkedIn accounts. Tweet about the accomplishment and link to the Facebook or LinkedIn links. Create visibility for the accomplishment within your own organization by being sure, at a minimum, to mention it to your superiors. Or better yet, send them an email message letting them know what you’ve done.

Remember, the key is to not appear to be tooting your own horn. Be humble and gracious. But be sure to let them know!

There’s more where that came from

It doesn’t stop there, as much as many people might believe that to be the case. There are initiatives such as an integrated marketing campaign, a community relations effort, professional presentation materials and presentation training, to name just a few. We’ll cover those in future blogs.

For now, the main thing is to get started by implementing the basics. If you’re not sure how, consider contacting a PR professional or career coach to get you off on the right foot.

Mike

You’ve decided it’s time to look for a new career opportunity in sales. Where to begin? Well, first you need to ask what it is you want in a position. For example:

• Huge base salary
• A lot of responsibility without any accountability
• A company that drives reactive leads for you to bring home

If that is the case, good luck!

However, if you are looking for the “right” fit, a place where you can make the most of your skills and strengths, a place where you can earn higher than average wages based on your efforts and results, a place that provides you opportunity and support so you can be challenged to reach your potential, here are 5 helpful hints.

Look at the company’s past, where they are today, how they got there and the reasons they have not reached the next level. Will you help them progress or will you be frustrated based on their restrictions?

Look at and talk to the existing sales staff, their profiles, success or lack thereof and ask “why.” What do they need to do differently to obtain greater success? What do they do well and how does that impact their results? Do you have the skills, traits and motivations to excel based on this data?

Look at the roles and responsibilities as well as expectations of the position. Be sure you understand what will be required and whether it aligns with what you feel is realistic and attainable. Are you willing, committed and able to be successful there?

Look at the company’s value proposition. How does it compare to the competition, and how does it align with the current market and industry needs they target? Do you have the background and expertise to separate yourself and win here?

Look at the compensation and recognition program and ensure it aligns with your professional goals and aspirations. Determine, based on all other components and questions, how you will realize your dreams.

These levels of analysis are not easy, but few things are more important than who you trust with your professional success. Do your due diligence and make sure you make the right choice. Sure, they say most people graduating college today will have eight or more jobs, but why do you need to?

To help ensure your choice, partner with a firm that can help you with the evaluation of those choices. This may be a career counseling firm or a solid recruiting firm. If you do not have one in mind, try The Sales Matrix.

I sincerely hope you find your happily ever after.

Dan