The Long Game... Discounting

I'll admit it... I'm unnaturally accustomed to looking at the 5-10 year implications of my business decisions.

It's the operator in me.

My individual contributor side and my operator side are the constantly arguing voices, shouting in my ears.

"Get that commission"

"Think about the future"

With end of year upon us, everyone wants to push through as many deals as possible. 

How can I get this prospect to sign faster? 

What can I offer to pull this deal into the month/quarter?

How big a discount can I get away with to move the needle?

Yes, we all want to hit our numbers. Yes, we all want a faster close.

But... how is that impacting your long game?

Say you have a deal where you've done everything right. The prospect has been properly qualified, the business case has been established, you've clearly illustrated the impact on the org, agreed on a compelling ROI, and then established timeline for the procurement process. Now you're in a holding pattern as they make that final decision.

I understand, it's no fun to sit and wait through their process. The temptation of sweetening the deal to speed things up becomes overwhelming.

This is where you need to be a grown up. Stop. Breathe. Take some time and give a little peek into the telescope.

How does the next decision affect the long game?

How about stepping back and thinking about the future... both your company's future and your own.

I get it, your employer might be a faceless giant. "They're making so much off of me." "This place is printing money, the discount doesn't matter."

You may feel intense pressure to hit this months KPI. But, is your job on the line if you don't get this deal in month or quarter? No seriously, is it REALLY?! (side note - if your boss is willing to fire you for slightly missing this current KPI while you have a robust pipe with a strong forecast in closing motion, it's most likely time to look for a new boss)

Look at the full picture. Consider it this way...

This deal you're trying to pull forward to a faster close... Let's call it $12k in ARR. Maybe you're only 5k away from goal. Now you're tempted to throw out a discount and close it next week. (Remember, this is reliably on track to close at list price next month.)

Say you could get approval for a 30% discount. That should be enough to push the decision, right? At $8,400 ARR you'll now safely hit - and exceed - your number. Easy decision, right?

But your month/quarter number isn't the only aspect of this deal.

You just left $3,600 ARR on the table to hit your $5k deficit this month. (if you have an ICR of 0.5%, you just traded $1,800 in actual income - real money - to hit a number on a report)

Now take off the IC goggles and put on an operators hat.

Perhaps your typical customer has an average 5 year relationship with your company. You just took $18k off the balance sheet to get a signature a few weeks or days early.

$1,800 out of your bank account and $18,000 out of your employers. All for a signature just a tad earlier than expected.

Is that reasonable?

No, it's not.

Stop thinking small. Stop being impulsive.

Look at the full picture.

Start acting like an adult.