As December rapidly approaches, many organisations feel the pressure to hit quotas before the end of the quarter. One typical strategy to achieve this is to give discounts.
I’ve always been intrigued by the giving nature at this time of year. Take the 12 days of Christmas – ‘my true love’ as the Carol goes, just-keeps-on-giving – nothing mentioned about what they got back in return, not very much I would suggest! Sadly, this often happens – one side keeps giving, the other keeps taking – and the behaviours become normalised.
This can also apply to hitting end-of-quarter sales quotas. Buyers will often know in advance that the sellers are under pressure to hit the numbers, and if they wait long enough, the discounts will start coming. For salespeople incentivised through volume-based targets (revenue/clients, etc.), discounting prices is not difficult. However, the cumulative total of these discounts can erode the bottom line for any business. So, how do companies incentivise customers to buy without giving the shop away?
Break the cycle
Structure customer expectations early – tell them there won’t be any last-minute giveaways – and stick to it! Get the customer out of the mindset of expecting unilateral discounts to be available at the end of every quarter.
Develop a ‘trading’ mentality
As part of the sales planning process, develop additional trading collateral (big and small) so that you can use these additional variables to trade when discounts are demanded rather than just unilaterally ‘giving’ them.
Influence the other side early
Before negotiating, make sure you ‘sell’ your proposition. Are there potential advantages to the customer in being an early adopter of the product or service? Can you articulate the benefits of taking the proposition now rather than later? This may take the form of gain or loss framing management – is the gain (of taking this early) or the loss (of delaying) likely to be experienced by the customer greater than the total discount they might otherwise have received?
Offer choice
People like a choice: delivering a proposition with two options (pitchfork proposals) early in the quarter can be attractive. It’s also a way to get customers to move away from the mindset of large end-of-quarter discounts. If we present one option with a small cash discount but the other with ‘non-monetary’ higher-value concessions – we offer a choice. If our non-monetary concessions are low-cost to us, we can provide value and achieve better margins.
Why am I so passionate about trading at this time of year? With a birthday on the 26th of December, I’m well used to being negotiated with from an early age – ‘If you agree to have your Christmas and Birthday presents combined – you can have one ‘big’ present! ‘Big’, of course, was (and still is) a relative term!
Sam Macbeth, 28th November 2024
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