Inside Sales Telesales Tips Blog

Discounting at the end of the quarter? Read this first.

  

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Most of my readers know I'm not a big fan of discounting, as I feel that much of the sales process is about building value for your product or service and linking it to the fair price for which you're selling it. But I got a call today from a reader that needed to discount to meet her numbers at the quarter's end, and she had a dilemma. Here's the situation:

Gayle's selling a transaction to an enterprise, and has already gotten agreement for a P.O. for the full amount. At the last minute, another division now wants the product too, and there's not enough in the budget to pay full price for the additional product as well. Gayle's VP of Sales has allowed her to give up to a 50% discount on the additional product, because he wants the additional revenue in this quarter's business. Gayle called us because she wants to ensure that her negotiation skills get her the order this month, but she's not sure of the proper process. Here it is:

1. Re-emphasize the value of your product at its full price. You can provide lots of reasons, but some of them might include the money your company spent on R&D to build it and ongoing maintenance and support costs to ensure that the customer is taken care of whenever he or she needs assistance. Therefore, your pricing is fair, not exorbitant. Gayle has already done this, as she's already gotten part of the order at full price.
   
2. If you are going to offer a discount, have what we call a "drop dead" date, beyond which the discount you're about to offer will no longer be valid. In Gayle's case, it should be September 30, by end of business day.
   
3. Give the prospect a valid business reason that you're willing to discount, in this instance only. If you give a discount too easily, the buyer will suspect that you could have given more, and that you can do it all the time. I guarantee that the buyer keeps good notes, and will demand the discount again next quarter, or next year. In Gayle's case, I suggested that she tell the prospect that the company needs additional revenue to finish the slow Summer quarter, and that since the Fall quarter is always good, there will be no business reason to offer the discount again in December. The time to act is now.
   
4. Tell the prospect why you cannot give the discount in the future. Again, a very understandable reason that you're discounting, from the prospect's perspective, is that Summer has been slower than usual. And as you suspect the economic situation will improve in 2009, you cannot anticipate that the discount will even be offered again following the Summer of 2009. You can also emphasize that your VP of Sales will in no way approve any discount beyond September 30 at close of business.
   
5. Stand firm on your "drop dead" date. When the agreed upon window to get the discount is over, it's over. Your credibility for all future transactions with the prospect company rides on this, and you've got to stand firm. You can stand very firm if you did a good job on item #4 above. And you'll be surprised at how often the prospect finds additional funding once the deadline has passed, provided that the prospect really does need your solution.
   
6. If you haven't gotten the order by noon of the last day and you can't reach your prospect, consider calling high, explaining that you're trying to save the company money (in Gayle's case it's $5,000), and that you need to talk to someone in the decision process to see if the PO is going to be generated, because in four hours, you'll have to add $5,000 to the price of the order. I guarantee you'll get action. There are great articles on this blog about calling high, so read them if you need additional tips on doing it.

So here we are at the end of the quarter, and Gayle now has her marching orders. If you've already offered a discount and forgot to provide a "drop dead" date, you should call back today and provide one. If you can't make the date on close of business of September 30, you can certainly make it on Friday's close of business, provided you've given a valid reason (see #3 above), such as business for the quarter is closing on Friday, as this business week is considered quarter's end.

Getting back to my original premise of not discounting in the first place, I'd encourage you to read my whitepaper on ROI selling. But if you have to discount, you now have a template for doing it that you'll find successful. It's what I teach in my inside sales courses and I encourage you to apply it today, and add it to your Best Practices playbook.