5 Reasons the Sales Department is Discounting

Guest post from Rebel Brown, author of Defy Gravity and an extraordinary consultant and speaker.

Read on as she peels back the layers on a dynamic that could be happening in your company, affecting profit and sales motivation.

“Is Sales discounting again?”

How many times have I heard this cry from clients?

It always makes me wonder if corporate citizens understand and appreciate how hard selling can be — especially if you have little air cover and not much ammunition.

The fact is that if sales is discounting, it means the company, and particularly Marketing, hasn’t done its job.

I’m not trying to pass blame. I’m just pointing out a “relative” truth.

Salespeople salivate for dollars. Come on, we all know that.  At least the good ones salivate — they’ll do whatever it takes to bring the revenues into your company so their wallets are happy.  Those are the reps you want working for you.

So if they are discounting — before you blame them, take a harder look.

Sure you’ll always have a select few deals you discount to open a door or seed a market.

But those are exceptions, not the rule, especially if discounting means that reps are losing money out of their own pocket. If reps are discounting consistently, then something is wrong.

It could be a number of things:

  • The Product. This is the last place some companies want to look, and probably the first place they should focus. It’s human nature to fall in love with your children, er creations. That’s what our products often become as we develop them, enhance them, nurture them. But more often than not, when Sales is discounting the product, then its capabilities, design, stability, architecture or something else is off the mark. So just admit your kid isn’t that cute, and find what it needs to make it more attractive.
  • The Story. Sales reps will act to fill a void. They have to — it’s the nature of what they do. If you don’t give Sales a story that customers understand, believe and care about, then they’ll do whatever they have to do to create that story. If that fails, they’ll cut the price.  It’s the nature of Sales. So get the story right, and work with Sales to make sure it works for them and their customers, not just for the citizens at corporate.
  • The Target Market. Just because they were your best customers in the past, don’t assume they are for this product or time. Like you, your customers are evolving and changing, following their own Phoenix flight plan. Make sure you’re still a match and if you’re not, either switch markets or products.  Discounting is often a sign that your aim is a bit off in the market.
  • The Trust Factor. If customers don’t trust that you’re the expert partner they’ve been looking for, they won’t pay you full price. They’ll want a discount for the risk they perceive they are taking. Make sure Sales has the evidence to demonstrate your expertise and prove relevant successes.
  • The Comp Plan. But what if the reps don’t lose that much money for discounting?  What if they can discount a deal to the point that you lose money — and they still get paid, maybe even slapped on the back for it? If you think it doesn’t happen, look around you.

My point is — discounting is a very telling behavior. Here and there, it’s not a big deal.  But when it starts to happen consistently, then it’s time to pay attention and fix the reason it’s going on.

And stop blaming Sales…They’re most likely doing the best they can with what they have been given.