Home > Blog > Newsletter > Do Price Discounts Solve Customer Service Issues? Not Really

Posted 14 Nov, 2017 | Posted in: Newsletter | Tagged: , , ,

All pricers think there can be improvements in getting the right price. Recently, I experienced a situation with the right pricing, product, and negotiating strategy. The story starts with my wireless provider. I had issues of dropped calls and, in frustration, I called their customer service. The agent told me that there was a scheduled maintenance going on at the cell tower which would make my experience better in the future. They apologized for the issue and told me that it would be fixed within 24 hours. Having done this a couple of times, I was trained to know that this could get me a price discount. So, I told the agent that I would be leaving their service. As soon as the agent heard that, he transferred my call to the Save Team. I knew I had them now. The Save Team would offer me great discounts not to discontinue the service.

I started with the usual – terrible service and I am leaving you blah blah blah… The Save Team agent patiently listened and then explained that even though the issue with the cell tower was not resolved, in order to leave and end my contract, I would have to pay $X to get out of contract. She further explained that the other features, such as the current low rates I was getting, access to their WIFI hotspots, etc. were unmatched by competition. After explaining the value proposition, the agent asked if I was sure I wanted to discontinue my service.

My bluff was called! I ended the conversation and remain a customer of that wireless provider.

Let’s review the conversation. What did the agent do? Knowing the easy way out would be to give a discount, she held to her pricing. She then explained the value to me, such as my use of WIFI hotspots, and the low rates I am enjoying. As I look at different clients we work with, this issue is prevalent.

We try to use discounts as Band-aids. If there is an issue with service…give a discount. Customer threatening to leave…give a discount. Customer doesn’t like the price…give a discount. More often than not, the issue is not with the price!

Unfortunately, discounting is the easiest tactic used to correct other shortcomings. Successful businesses identify these issues to stop price leakage. My advice for the next time you are asked for a discount? Take a step back and re-evaluate the situation. Deploy value messages to understand if this is a bluff or a real issue and then act accordingly.

 

Saad ShahzadWritten by Saad Shahzad

Saad Shahzad is a Business Consulting Manager at Holden Advisors.

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