Impact Pricing Blog

Why You SHOULD Give Salespeople Discount Authority

Last week I wrote why salespeople should NOT be given discount authority.  Of course, that’s only one side of the argument. This week, we’ll take a look at the other side.  

Salespeople are closest to the customer and are in the best position to determine how price sensitive each buyer really is.  That’s not to say they aren’t biased, but they do know more than anyone else in your company about that one buyer.  The rest of this blog assumes that in order to win a piece of business, the buyer requires a discount.  

What happens when you give salespeople discount authority? 

First, it speeds up the sales cycle. There is evidence that companies that respond faster to price requests are more likely to win.  Winning more, faster is a great reason. 

Second, it lowers the cost (and time) of managing escalations.  Without discount authority, salespeople bring discount requests back to someone at headquarters who then approves or disapproves it.  Of course, HQ needs to know the details about why this buyer needs this discount.  Then, they deliberate and make a decision.  This takes the time of someone, often an executive, at headquarters.  

If you find that every escalation is approved, then your process is badly broken.  You are simply slowing down the sales cycle for no reason.  

Giving salespeople discount authority allows them to quote faster, win more, and it saves time for executives at headquarters. But salespeople will give bigger discounts than are necessary. What’s the right answer?  Next week I’ll give you a couple of tips on how to compromise between these two extremes.  But if you’re impatient, or want even more of this type of discussion, please read my latest book, Selling Value: How to Win More Deals at Higher Prices.  

Now, go make an Impact!

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Tags: sales, salespeople, value

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