Discounting Doesn't Make You Money

"Car Incentives Backfire On Big 3" and "Rebates Can't Halt Big 3 Sales Share Slide" were recent headlines in the Chicago Tribune.

For the past two years GM, Ford and Chrysler have been using rebates, incentives, and Zero Percent financing to sell cars. Unfortunately for them, the auto-buying public aren't motivated by these incentives any longer.

To get a car buyer's attention they must create bigger - and more expensive - promotions.

"The Big Three's combined share of U.S. sales stood at just under 60 percent in July, down from 61.6 percent a year earlier. At the end of 2001 the market share had been 63.2 percent.

"Each point of market share represents billions of dollars in revenue." the Tribune reported.

American consumers are beginning to ignore discounts of $4000 or more per car. They've caught onto the automaker's tricks. GM, Ford and Chrysler have been raising their prices to pay for these new incentives.

Furthermore, "As incentives lose their potency, they continue to drive down the resale value of domestic vehicles and fuel the image that the Big Three can't compete on quality." the Tribune stated.

Because of this shell-game of offering sweeter deals - while at the same time increasing prices - nobody believes the base sticker price any longer. There is a lack of trust that you're getting value for your money.

When the focus is on incentives - and the "deal" - the issue of the quality of the product or the value of the brand is pushed aside. The only issue of concern is price.

And when your focus is on price, you're not building a relationship with a customer. You're just selling a product to move it out of inventory, but at a lower profit margin. Or perhaps at no profit.

When the customer's looking for another automobile, the only issue will be the cost - or deal - for the car. There's no customer or brand loyalty.

Everybody's Having A Sale

As I was working on this essay, I opened the Sunday copy of the Chicago Tribune, and found that every single advertisement was promoting a SALE.

Lord & Taylor, which just announced a major restructuring with many store closings, seems to be known as the department store that has "everything" on sale. They were offering 25 - 50% discounts.

As were Marshall Fields and Bloomingdale's.

Carson Pirie Scott was offering their 70% off Yellow Dot Sale along with 10 - 15% discount coupons.

Mattress, furniture and tire companies were offering 0% financing and discounts.

Why is it that nobody can sell their products at full price?

Tiffany's Selling Value

Tiffany & Company - on the other hand - was selling value.

Their advertisement read "Only One Per Customer.

A diamond of superlative quality and brilliance. Each carries its own certificate, a promise of Tiffany excellence. From $970 to $1,000,000."

Stop Selling On Price

When the only thing that separates you from your competition is price, you're in trouble.They look at you - and your competition - as offering identical products and/or services.There is no concern for

• Value,
• Quality,
• Service,
• Knowledge,
• Training,
• Skill,
• Ability to solve a problem,

or anything else.

Though you 'may' close a sale, because you've the lowest price, you don't have a customer. You completed a transaction.

Yes, there's a BIG difference between completing a transaction and building a relationship.

Once your customer's have learned that your prices are negotiable, they'll never pay full price again.

Instead of focusing on price, focus on the customer's needs. How do you do this? By asking better questions.

Ask Better Questions

Your job isn't to get into discussions about price. Price should be the last thing you talk about. Your job is to find out what the customer wants.

Getting back to the auto manufactures, the better questions to be asking are:

• Why do you want a new car?
• What are you looking for in a new car?
• What are you going to be using it for?
• How long do you think you'll keep it?
• How big is your family?
• How many hours a day will you be driving it?
• What kind of driving do you do?
  (Long distances or local stop and go driving.)

Depending upon the answers, the salesman can then help the customer BUY the right car.

When you're talking with your customers, you need to find out

• What they want!
• What they need!
• What their problems are!
• What is the financial cost, or impact, to them!
• How you can help them!

Once you've answers to these questions, you're better able to show how your products or services can save the customer time and money, or make their life easier and better.

Two Examples

Steve, one of my consulting clients, is a financial planner. One day he sat down with a prospect and asked this question, "What are you trying to do with your financial planning?"

For the next 45 minutes the client told him. When he had told Steve, his goals and objectives he said, "Steve, do you think you can help me with this."

"Of course." was Steve,'s reply.

Since Steve started asking better questions his business has more than doubled.

Caroline, another consulting client, owns a piping installation company. Upon review of her sales records, we discovered that she was closing 20 percent of her bids.

She was putting out 500 bids a year. One hundred of them closed, and 400 didn't. Meaning, she and her team were spending a great deal of time, effort, energy and money creating bids for 400 people who didn't buy.

Talk about wasted time and wasted effort.

Caroline and her people, started asking more - and better - questions before she 'considered' putting a bid together. They were working harder to find out what the customer wanted, and to better qualify the customer.

She was now declining to put together bids on the majority of projects she previously would have quoted on.

As a result, she was focusing on the best opportunities and not wasting time, effort, energy and money on marginal opportunities.

(She even discovered that many times she was being asked for a 'rush' quote because the customer needed one more bid to keep the boss happy, and justify their decision to place the order with their preferred supplier.)

During one three-week stretch, Caroline's company closed $1,000,000 of new business and had their best three months - May, June and July - in the company's history. As a reward, she's planning a European vacation.

Once Steve and Caroline started discussing value and quality. And focused on solving problems, their businesses began to grow by leaps and bounds.

Five Things To Do

Here are five things you can do to close more sales and make more money:

• Look for NEW people to call.
• Stop calling on the same OLD people over-and-over again.
• Ask great questions.
• Look for problems you can solve.
• Work with decision makers.