Discounting is a sure sign of sales failure
For many sales organisations, December is both the end of the sales quarter and the end of the sales year. Individual salespeople and entire sales teams are under pressure to deliver. Unfortunately, many won’t.
In acts of desperation, many believe they need to offer “once-only, never-to-be repeated” discounts to get deals over the line. These may work in undifferentiated markets where buying on price is the norm.
But for complex, considered B2B purchases where “do nothing” or “wait until later” is a credible option the most common effect these discounts have is to reduce or destroy the salesperson’s credibility.
If the customer is intending to buy anyway, all the discount does is to reduce margins and set a precedent for the future (this is particularly damaging to the profitability of recurring revenue business models).
If the customer is not in a position to buy, then putting the customer under pressure will not work in the short term and is likely to damage relationships in the long term. So, what’s the alternative?
Unfortunately for those who were hoping for one, and despite what the get-rich-quick sales charlatans may tell you, there is no instant miracle cure. The foundations of failure have been laid far earlier in the sales cycle.
If we end up having to discount anything that is not a recognised commodity, it’s a sure sign that we have failed to establish distinctive value early on in our sales cycle and the customer’s buying journey.
This may be because we arrived late to the party - perhaps triggered by an unexpected RFP - and are as a result are no more than “column fodder”, forced to play within rules that have been set by others without our involvement. It’s often better to not bid at all under those circumstances.
If your sales team is regularly only getting involved at a late stage of the customer’s buying journey, something is badly wrong at the top of your funnel. Maybe they are not being proactive enough. Maybe they are not targeting clearly enough. Or maybe they only want to get involved once an opportunity is BANT qualified (a huge error).
Your customer’s problem value gap
Or maybe - even if they have grasped the huge benefits to be gained from getting involved early and shaping the prospect’s thinking, your salespeople think about value only in terms of what their solution can offer.
Given that most complex B2B buying journeys stall or get abandoned because the customer remains unconvinced that they absolutely have to act now rather than later, this is a major tactical error.
Instead of leaping straight from uncovering a customer need to proposing their solution, your salespeople need to remain invested in the customer’s underlying issues. Their first priority must assess whether their customer regards the case for change as being overwhelming.
And since it often isn’t, they need to use every available tactic to convince the customer that urgent action is necessary - by helping them recognise the full consequences of the issues they are already aware of, and by introducing previously unrecognised threats and opportunities.
Unless and until the case for change is overwhelming, many customers will simply decide that they can afford to wait and that it is OK to stick with the status quo, at least for the moment. If you want to create natural momentum in the sale, you need to equip and encourage your salespeople to help to stretch their prospective customers “problem value gap”.
Your solution value gap
But establishing a compelling reason to change is only part of the equation. Your salespeople also need to differentiate your solution from all the other options available to the customer. Their choices will often extend beyond the organisations you conventionally regard as direct competitors and will include all the other ways in which the customer could potentially resolve the underlying business issue.
Simply claiming that your solution offering is “better” won’t cut through. Buyers expect every salesperson to claim that their solution is the best, so they tend to disregard all such claims, particularly when they are not backed by independent evidence.
“Better” claims also tend to be associated with perceived functional superiority, but this isn’t what most senior business buyers are interested in - they are far more concerned about outcomes.
That’s why you need to equip your salespeople to convincingly explain how and why your approach is distinctively different before then showing how this leads to superior business outcomes. Different should always come before better when positioning your organisation and your offerings.
Leading with value
In non-commoditised environments, successful B2B sales organisations lead with value rather than competing on price. They invest time in establishing the value and consequences of the customer’s problem, and in developing the compelling reasons for change.
Building on the problem value gap they have established, they convince the customer that their distinctively different approach will lead to the superior business outcomes they have been looking for.
If your salespeople are able to master this, they will win more business at higher margins and end up with happier customers. If they are unable to do so, they will keep riding the discount flywheel.
If your salespeople have a discounting mindset, ask yourself these two questions:
- Have we been encouraging or allowing them to offer discounts that will not result in bringing forward a buying decision, and could compromise our future scope for manoeuvre?
- Have we allowed them to offer discounts that were unnecessary - because the customer would have bought anyway - thereby compromising our current and future profitability?
If the answer to either question is even a suspicion of a “yes”, you need to be laying the foundations of a value-creating sales culture for next year, and you need to start today. If you’re wondering where to start, give me a call.
This article was first published on LinkedIn.
ABOUT THE AUTHOR
Bob Apollo is a Fellow of the Association of Professional Sales, a member of the Sales Enablement Society, a founding contributor to the International Journal of Sales Transformation, a member of the Sales Experts Channel and the driving force behind Inflexion-Point Strategy Partners, the leading UK-based B2B value-selling experts.
Following a successful corporate career spanning start-ups, scale-ups and market leaders, Bob now works as a strategic advisor, mentor, trainer and coach to ambitious B2B sales organisations - equipping them to create, confirm and communicate their unique business value in complex sales situations.