Month and Quarter End Discounting Sets Bad Precedents
If you listen carefully today, you can hear salespeople out there in the field discounting to get opportunities closed here at the end of the month/quarter to make their revenue plans. What they need to know, that in the absence of establishing the value of your product or service, this tactic will backfire on them in many ways. And seasoned buyers know all about this goat rodeo, and will play the game all the way up to March 33rd to get what they want.
How do you stop this predictable cycle from happening?
During a phone conversation with a VP of Sales, he told me that his team was busy “cutting deals” to hit their annual revenue plan. This is not selling, and the words chosen made my skin crawl. If your team seems to rely on discounting to get orders, maybe you need to focus more attention on your sales process and developing your team to sell value. The value the customer will receive by using your product or service, not the discount they will get from price list. Building the discipline to ask the customers the right questions to qualify them as a high or low margin opportunity is a learned skill. It takes restraint for sales people who have been conditioned to close, close, close. We know that margins can be improved with well trained sales teams and we’ve seen that happen hundreds of times.
Maximizing your profit margin doesn’t happen by accident. It won’t happen by sending out a memo targeting desired margins for the coming reporting period either. It is a result of leadership identifying the development plans needed for the sales team, providing the training, giving feedback on performance and ongoing coaching to reinforce the process that has been identified to close deals without needing to resort to deep discounts.
Revenue is important and sales quotas are an important part of a business plan. Discounting adds risk as it increases the amount of products to manufacture or services that need to be delivered to achieve a given profit goal. Start today to protect your margins in future quarters. Having regular deal reviews will open your eyes to the reliability and quality of the opportunities in your pipeline. Want to buy some margin insurance? The time is now.
Flannery Sales Systems helps organizations develop and implement a repeatable sales process. Improving the effectiveness of your sales organization is the key outcome we provide to clients. We would welcome an opportunity to explore your needs and understand where your team could benefit from improved skills and sales processes. Flannery Sales Systems works with a broad cross section of industries and we are confident we can enhance your results.
