Selling is hard work. I was a salesperson early in my career and failed horribly. So I have some empathy. Sure, I still make fun of salespeople occasionally, but who doesn’t? What I write below is with sincerity. Read on to learn why you should not give salespeople discount authority.
Salespeople need to find potential buyers, qualify them, figure out what they want, communicate the value of their product, negotiate the terms and price, and close the deal. They typically get commission after they have closed the deal. Any salesperson on a salary-only compensation won’t have their job long if they don’t figure out how to close deals. Closing the deal is the most important step. It’s the most visible. But it can’t be done until everything is done.
Salespeople have many tools at their disposal including collateral, presentations, videos, demos, recommendations, trials, and sometimes price flexibility. When choosing which tool to use the salesperson determines what is easiest for them and most likely to work. A discount doesn’t always work, but it is definitely easy. This is why if you give a salesperson the authority to discount to 10%, they almost always will. It’s a tool to help them close. Besides, nobody thinks about the cost of collateral before giving it to a potential buyer, why think about the cost of any sales tool, including a discount?
But that 10% discount is all profit. Imagine if you could increase your profit by 10% of your revenue. That is HUGE! So the first reason to not give salespeople discount authority is your bottom line.
The second reason is it forces salespeople to learn to sell value. Buyers only buy when they think the value of what they are buying exceeds the price. If salespeople can’t lower the price, they must increase the buyer’s perception of value. This should be the purpose of salespeople.
Of course, there are exceptions to every rule. Next week we will talk about why you SHOULD give salespeople discount authority. But for now, think about what it would be like if you eliminated the power of sales to discount.
If you 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!
Related posts: Why You SHOULD Give Salespeople Discount Authority
