Why Discounting At The End Of The Year Fails

Every year, at about this time, salespeople and their companies begin the process of offering discounts to their prospective clients as a way to compel them to sign a contract before the end of the year. Those behind on their goal offer to lower their price in exchange for the possibility of making their number. Others do so to run up an already good result, punctuating their year with a strong closing number. Many —if not most—of the prospects offered a lower price don’t take advantage of the discount, preferring to allow the initiative to slip into the next year. If your dream client wasn’t motivated to buy because of a discount you offered them at the beginning of your engagement, why would a discount at the end of the year suddenly compel them to buy?

Some consumers buy things they don’t need because they are on sale. You may have a relative who brags about the great deal they got on something they don’t need and will never use, but who are nonetheless proud to have acquired something at an exceptionally low price. You find these people in the retail stampedes on Black Friday, rushing to make sure they receive a valueless door prize. You do not, however, see this phenomenon in business-to-business sales, particularly in the complex sale.

There are bargain seekers in business-to-business sales, those who believe that the value of the solution must include their taking money out of their solution. Mostly, however, there isn’t. While you will always be asked for a lower price, that isn’t why your client buys (and you should hope it never is what compelled them).

Why They Don’t Buy Now

The reason your dream clients don’t rush to sign a contract to obtain a discount is that a discount did not motivate them in the first place. They are driven by something else, some better result, or some problem that must be addressed. But if they are going to buy anyway, why don’t they take advantage of the discount you offer them?

• No Consensus: One of the reasons your discount doesn’t work is that the contacts you are working with haven’t yet built consensus around the solution or the decision to change. No matter how deep the discount, it isn’t likely to be enough to compel your contacts to move forward without the support of their team. You also make it more difficult for them to get consensus when many of the stakeholders you need are taking time off over the holidays.
• Time Constraints: There is no discount you can offer that provides your dream client with the time they need if a lack of time is the reason they aren’t moving forward. The later in the year, the less time your contacts have to finish their year strong, depriving you of their time, and making it more difficult for you to end your year strong.
• Other Priorities: Your prospective client has their own year-end projects and initiatives they need to finish. Their priorities are going to come before your priorities unless you can make your priority their priority. Obtaining a discount doesn’t often outweigh their broader priorities. You hope that your initiative is something they need to get started at the beginning of the new year, but if it were that compelling, you would need no discount.
• They’ll Get the Discount Anyway: Some percentage of the contacts you call on believing you are going to give them the discount anyway, even if they have to wait until, say, the end of March and the close of your quarter for you to agree to what you offered in December.

Better Strategies

There is nothing easy about selling, and it is never easy to reach your goals. Some strategies can improve your chances of meeting your goal, and reducing your reliance on discounting in the last few weeks of the year.

• A Ten-Month Year: If you don’t want to struggle to reach your goal at the end of the year, don’t wait until the end of the year to start trying to reach your goal. The way to have more time to reach your goal is to give yourself less time. Instead of trying to reach your goal in twelve months, plan to make your number in ten months. This strategy will require you to pull two months of results forward in time, providing you with a buffer at the end of the year. To create that buffer, you will have to accomplish more during the first ten months by taking more action to develop and win the deals you need.
• Commitment Gaining: Most salespeople are poor at gaining commitments. They do nothing to exercise control of the process, and many believe the client should determine what they do and when they do it. By ceding control to the client, you allow the client to make mistakes, like skipping necessary conversations and avoiding some of the commitments required of real change. The framework in The Lost Art of Closing: Winning the Ten Commitments That Drive Sales provides a blueprint for controlling the process and creating more certainty around closing dates, in large part, because you are asking for commitments. By controlling the process, you ensure your deals stay on track.No more pushy sales tactics. The Lost Art of Closing shows you how to proactively lead your customer and close your sales.
• Agreement on Go-Live Dates: In The Lost Art of Closing, one of the commitments is the Commitment to Change. If your client isn’t compelled to change, no discount is going to motivate them to buy. If they are compelled to change, there is no reason that you can’t negotiate a start date and provide a timeline of all the things you’ll need to accomplish together between those dates—including the date you will need a contract signed. The stronger the agreement on the start date, the more likely you are to get a contract signed in time to make that date. Trying to accelerate that timeline in December is mostly a fool’s errand.
• Move Value Forward: December is too late to start trying to motivate your client to buy, which is why discounts are often impotent. If the return on the investment in your solutions is significant, you can use it to compel your prospective client to capture, say, the first two months of value by signing a contract and starting earlier in the year. If you want to compel people, leverage what is already causing them to change.
• Ask without Offering a Discount: There is no reason not to ask your client to sign the contract without offering a discount, explaining how it will allow you to start resourcing their solution and give them the ability to put it in place as soon as they are ready. If they are going to buy, why not ask for a signature?

If you want to offer a discount, far be it from me to suggest you miss your number when giving a few clients a discount would get you over the line. However, if you run this fire drill at the end of every year, maybe start building a plan to be less reliant on discounting at the end of the year. December is the same time of year that sales organizations who reached their goals earlier use the next year’s price increase to compel people to act now, retaining their margins instead of taking money out of their client’s solution.