On Product Management

Thanks for the discount, I’m still not buying yet

By Alan Armstrong

A true story:

Glen came to the sales meeting on December 20 saying that he was going to close a significant deal but needed to give a big discount to make it happen. “I’ve been working on this deal for 9 months, and they just told me that they have budget to close the deal this quarter, but we have to discount.”

The product was not doing very well, so the rest of the team was both excited and empathetic. A few minutes later, Glen was authorized to discount the product by 60 percent.

Do you think he closed it? Yes, he did.

Within a few months, this level of discounting became standard practice. Product Marketing, who set the price in this company, came under significant pressure to adjust the price list to reflect the feedback coming from sales. “We can’t sell it at list!”, said the sales force. Just look at Glen!

Without much to go on, the team started looking at new pricing models. But one product marketer, we’ll call him Michael, started looking beneath the surface. Instead of just listening to what the sales people were saying, he looked into the conversations they were having with their prospects.

What do you think they found?

Glen’s deal seemed related to quota attainment. He was $100k short for the year, and one day before the sales meeting had received an email from the buyer:

We want to move ahead with all 200 licenses. However we only have $125k in the budget. If you can do it for $125k, we will move forward. Feel free to go lower, but we can’t pay any more.

You can’t make this stuff up. Why wouldn’t Glen go to bat for the discount? Of course he did. And he got it, and even exceeded his target.

But looking further back into the conversation history, Michael found the smoking gun. In March of the same year (Glen had been working the deal for 9 months, after all), Glen received an email from the client:

Hi Glen, I just wanted you to know that we’ve secured the budget for your product. We will move ahead in Q4, assuming that the proof of concept proceeds according to plan. Below I have outlined the things we want to see demonstrated … etc., etc., etc.

There it is, the verbal ‘yes’. This is a perfect opportunity for the sales person. They are saying that they want your product, and they want it in this timeframe, and under these conditions. Further, since Glen had already given them some ballpark pricing, they wanted it full price. At this point, some sales people might put in place an agreement for sale conditional on delivering certain value in the POC.

But not Glen. Glen wanted the deal NOW. He responded, and logged his response in the CRM:

Hey guys, good to hear. I talked to my manager, and we can offer you a 50% discount if you’d be willing to close this business before March 31.

Yes, this really happened. The buyer responded:

Glen, thanks for the offer and it’s good to know the price is very flexible. We will take the discount but need to go through the steps. I’ll adjust the budget for Q4 accordingly.

Sometimes, folks, it’s that easy.

When I share this story with product marketing audiences, many of them respond that they do not have this kind of access to the CRM. Really? How can you expect your marketing team to set the price when they can’t see the most basic interactions between buyer and seller?

I am developing an eBook on this topic, “It’s never about price,” in which I will share these and other stories from the trenches of product marketing and sales. Having interviewed about 250 buyers in the past 2+ years, I have noticed more than a few trends. Sellers frequently misunderstand buyer needs, and as a result end up negotiating on the only thing they understand: price.

Stay tuned for more stories. I will be presenting on this topic at Product Camp Silicon Valley on April 2. If you like this story and want to hear more, please vote for my talk:

Vote here: It’s never about price: The real reasons behind 250 B2B buyer interviews

Tweet this: New post @onpm – “Thanks for the discount, I’m still not buying yet” http://bit.ly/f3qmbn #prodmktg #marketing #sales #prodmgmt #svpcamp

Related posts:

1. Your price is (probably) not the problem
2. Who's in charge of price? (Hint: It's the person who speaks with the buyer.)
3. Unsticking the stuck deal
4. Screw the Sales Process. Study the Buying Process
5. A tale of two companies: The discounter and the price leader