Wednesday, January 26, 2011

Dangerous Discounts


The Perils of Discounting
by The Whetstone Group
Problem: The CFO was worried. For the past six months the company's margins had been dropping and now they were at the point where something had to be done. Finance had researched the situation thoroughly and the finger was pointing directly at sales.

Analysis: Ron, the new sales manager, was brought in from outside the company to build sales volume. Aggressive and optimistic, he was determined to make a name for himself quickly. In his eagerness to increase sales, he began to approve his reps' requests for discounts to close deals quicker. He believed shaving a few points off the selling price wouldn't hurt anything, and they'd quickly make it up with increased volume. Pretty soon, as his reps discovered that discounts were easy to get approved, they began offering them more frequently and they became dependent on discounting as their default closing tactic. Sales were increasing, but Ron wasn't paying attention to the bigger picture...

SalesDog 2701 Loker Ave. West, Ste. 148, Carlsbad, CA 92010
Tel: 760-476-3700 • Fax: 760-476-3733 • Web:

Sphere: Related Content

No comments: