Using marketing to create meaningful product differentiation separates you from competitors and allows you to command price premiums. One differentiation strategy should be the elimination of bad discounts.
Discounts should never lead to a loss of margin. Instead, discounts should reward customers for activities that improve their value as a customer - either by reducing your costs or improving demand.
As a first step, evaluate and build systems that reward customers based on desired behaviors.
- Not getting paid on time? Equate prompt payment with a discount that reduces your aging.
- Have customers that are time consuming? Provide a discount for ordering online.
- Have customers that are not properly utilizing their software? What about discounts that kick in once certain adoption milestones are achieved?
With win win discounts in hand, sales is then equipped to suggest discounts from a menu. The customer can then select the discounts that are in their best interest.