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Should Salespeople Have Pricing Authority (Part 2) by Tom Reilly, author of Crush Price Objections (Motivation Press) If you read the last installment of Sales Bytes, you know that I do not believe salespeople should have pricing authority. I promised that this issue would be more about damage control. Let’s assume I didn’t convince you to abandon the policy of letting salespeople discount. So, this article is more about controlling the arterial bleeding from non-strategic discounting. Two-thirds of salespeople and their managers offer an average discount of 8.3% when a buyer asks for a cheaper price. Why 8.3%? Where do they come up with this number and under what circumstances will they give it. Of equal interest is that most salespeople, when they discount, give a “rounded” discount: 5, 10, 15, 20, or 25%. Why? What is special about these “rounded” numbers? What is your company’s discount policy? Do you have guidelines for how you discount or is it as arbitrary as I suspect? What vetting process do you use or what filters must this discount pass through before you pass it on? On what criteria do you base your decision for when and how much to discount? If you want to improve your bottom line, improve your decision process. If you decide to discount, you must have guidelines. You would probably include some of the following in this decision process: profit, volume, product mix, loss leader, scarcity, reciprocity (you scratch my back . . .), competitive pressure, inventory clearance, special promotions, discount levels, etc. There must be some rhyme and reason for cutting the price. Be stingy. Be selective. Be strategic. Random acts of discounting are like death by a thousand knife cuts. |
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