Tuesday, February 21, 2012

What is Discounting Costing You?

Discounting is unfortunately a way of life for many of our sales professionals today. 

There is a new breed of buyer who is more skeptical and frugal than ever before, indicating that price is the key factor in over 64% of decisions (U of Dayton). As well, these buyers are now firmly in control of the purchase cycle, inviting sales later than ever, when the process is already 65% complete (Forrester).

The engagement for many sales professionals doesn’t start at the crucial opportunity discovery or needs analysis phase. Instead, the engagement occurs when the “bake-off” is in full swing. As a result of the late invite and competitiveness of this stage, our sales professionals are often forced to discount as the only way to win the business.

Unfortunately, this has a high cost. Take a typical $500M software company. Discounting of a typical 10% per deal can add up, costing this organization $50M per year in lost sales.

What if you could reduce the number of deals where discounting was needed, and improve deal size overall?

For our $500M example, this would result in:

·         Reduce discounting by 10% = $4M

·         Reduce discounting by 30% = $12M

Accomplishing the reduction in discounting is a two pronged approach, enabling sales with:

·         Provocative content and tools, enabling them to engage earlier in the sales process by moving beyond the typical product / solution sales pitch, to provide compelling and challenging insight to prospects. This includes addressing key questions the buyer has early, especially:

o   Why Change? – quantifying for the prospect that there is a significant cost of doing nothing, and that the status quo is not an option

o   Why Now? – diagnosing and prioritizing the issues for the prospect, especially recommending the right solution and quantifying the value, significant ROI and fast payback.

·         Proactive tools to move the discussion beyond price, to focus on total cost of ownership (TCO) and quantifiable value advantages of the proposed solution. This enables the sales professional to address “Why Your Solution?” without the answer having to rely on discounting.

To learn more about the cost of discounting and recommended best practices, click here:
http://www.alinean.com/content_optimization


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