My Biggest Mistake
(Shout out to Marcus Cauchi for inspiring this one). I was on a great sales phone call, everything going swimmingly; until I blew it. Here's what happened.
First, some background. A few years after setting up my own speaking/training/coaching business, I landed on a great idea about price discounting. I had seen too many professional services firms fumble this issue; when pressed by a potential client to give them a special rate, they eventually caved in.
The problem with giving discounts is that it leaves the client wondering if they could have gotten even more. And since also you ended up accepting a price you didn't start out with, the whole process leaves a taste of distrust in the mind of the client.
Solution: have a few standard discounts, and never deviate from them. In our case, discounting for volume and for non-profits made sense, but nothing else did.
I would explain this to potential clients as "We don't do other discounts, but that means I can guarantee you that you are not paying a nickel more than Google, JPMorgan Chase or Microsoft. And since our name includes trust, you can appreciate we'd never want to make that claim and then violate it by offering a special discount to you or anyone else." That worked out pretty well with most clients; in fact, most respected it.
Back to the story. The call was from a senior leader of a new consulting firm. He had a great resume, knew every aspect of the consulting business, and most of the top people in the industry. We both commented on how enjoyable it was to be speaking with someone so knowledgeable.
He asked about our rates, and I told him, and the conversation noticeably cooled down. He asked if there were a way I could grant them a reduced rate, and I gave him the "no discounts" spiel. He said he'd have to think about it.
Upset at such a promising conversation going south, I said, "I'd hate to let this opportunity pass us up; what would it take to make it happen?" He said he'd think about that too and get back to me.
That night he emailed me saying the deal was off. Why? Because I had made such a big deal about a principle – no discounting – and then offered him a discount. He said it was unfortunately clear that I didn't live by the principles I espoused, and he wouldn't work with such a person.
Obviously, he was right. I felt horrible, but there was no comeback. I emailed him back acknowledging the truth of what he said, and wishing him well. I never heard from him again.
Does your firm have a set of principles? Are they on the wall, on posters, built into email formats, and cited at major speeches and recruiting events? If so, all well and good, but that's nowhere near enough. If all you're doing is fog-sculpting principled-sounding words, you're not living them. And people will notice.
[For a fabulous story about transforming a large company by focusing on principles, read this excellent piece by David Burkus on how Paul O'Neill transformed Alcoa by relentlessly focusing on one principle.]
Quick Wisdom Quip: Be ruthlessly principled about your principal principles.
Practical Tip:? List your publicly stated principles. Get a team together to murder-board them (think Shark Tank). Ask yourselves what actions would truly further those principles, and what actions would violate them. List both kinds of actions you have taken. If that list is empty, there's your problem.
Stop treating the symptoms. If your small business is hurting, you need to uncover the underlying illness. I will help you do just that. You can have the Healthy Business You Have Always Wanted.
7 个月"What would it take to make it happen." We've all said it, hopefully only once. Setting principles and sticking to them is tough. Thoughtful (and hard-tested) planning is essential, as you said. A thorough review of your intentions at the get go is also worth the effort. Thanks, Charlie for reminding us that we always have the opportunity to learn from our actions.
Militant Moderate
7 个月Yes, it's a powerful story. But, and this may be just me, I didn't read the "What would it take" question as specifically and necessarily relating to discounts. I know the context implies it and, given that principle is the issue, it could be disingenuous to claim otherwise. It reminded me never even appear to exploit ambiguity.
Blue & Gold Officer, U.S. Naval Academy; Advisory Board, Virginia College of Veterinary Medicine
7 个月Thanks as always Charlie for the hard-learned insight. As organizations get bigger, they drift farther and farther from their espoused “guiding principles”(GPs). GPs are the things that help guide decision-making when established procedures/protocols do not apply to the problem at hand. But I have seen such instances where the exercise of rational judgment and application of the GPs gets punished because the leader didn’t ask the organizational bureaucracy for permission or authority to take the necessary action. Decision-making paralysis seeps in very quickly, and the GPs become irrelevant. This is particularly the case in large organizations where functional authorities, whose job is to support & facilitate line/P&L success, try to compete against line authority. What functional bureaucracies never seem to understand is that you can’t write a rule for every scenario an organization faces, so GPs are necessary to be the epoxy filling the gaps in organizational rule books. So much organizational value is wasted hiring large functional staffs to police line/P&L leaders. That’s a bad business formula. A better formula is to hire principled & ethical line leaders, and employ functional experts to help them deliver.
Managing Director & Founder at Epic Communications Limited
7 个月Charles H. Green excellent insights. I never equated a discount as a "Trust" issue but now I see it. It seems pushy and hard-sell which creates the impression of "scarcity" and desperation. I think communicating why you're giving a discount: "moving old stock" or "some flaws in the product" or some other reason. I just bought a vintage watch on eBay for an amazing price. It was much lower than what other sellers were offering. My first question was "What's wrong with it?" In the end it arrived in perfect condition, runs perfectly and has all the paperwork. But yes, my first question was "Why was this so cheap?" On the other hand, I've been running a dance event for the last 4 years. My entry price is 40-60% cheaper. My nasty competitors instead of lowering their entries attack me as "cheap". But the customers understand the pricing is part of an "accessibility" messaging that welcomes newcomers and offers convenience. I promote my event saying "Why pay more?" "Why charge more?" Drives them crazy but because I've established TRUST with my stakeholders they know my pricing is part of the "accessibility" postioning not a "desperation" postioning.
Value-Based Selling Coach | Developing Top 10% Performers | Strategies for Must-Win Complex Sales
7 个月I feel you pain Charles. I have a closet full of skeletons like that! A great way to learn though eh? There are so many reasons to not discount. and shooting your credibility in the foot is IMHO the biggest.