Don't let price discounting become your biggest weakness

A few months ago a long-time client decided to take a chance on discovery meetings with their sales team and strategic leaders. The marketing and product development departments were using an internal competitive analysis to help shape their road maps. The sales departments also had competitive intelligence forums and various methods of data gathering, turned into competitive battle cards for the sales force.

After their first set of interviews were completed, they learned the buyer feedback was completely contradictory to what their internal data was telling them.

Price Discounting Weakened Competitive Advantage

Because my client was losing constantly to competitors on price, their strategy was to discount the price in order to close the deal. When that didn't seem to work, they decided to cut deliverables in order to match the competition's assumed price.

These strategies were not working. In fact, the majority of the loss deals evaluated showed that the buyer had a budget over the total cost proposed by my client — and the buyers spent more money with the competitor.

So Why Were They Losing on Price?

After only five discovery meetings with the sales rep and teams, two data points became apparent:

1. Sales reps were not selling the value of the product. Internally, their intelligence team was pre-targeting opportunities that would need to be heavily discounted to win. One sales rep said: "I don't think I ever demoed [this feature] because I knew the competitor had a better option for them."
2. Marketing collateral was not reaching the sales team. The marketing team did have documentation supporting the separation in cost and added value — but had not rolled it out to sales. Transparency and communication was missing between departments.

Tip: Have the marketing team send out periodic emails informing the sales teams when new documentation has become available and where to find it.

Revamping Sales and Marketing Objectives

After discovering these root causes, the Win Loss analysis program and objectives were revamped. Diagnosing the problem by listening to only one side of the story — even if it's the buyer's side — means you miss the ability to capture actionable intelligence. It takes a clear picture of the sales team's knowledge, the key players' insights, and the buyer's perception to find root causes and best practices.

What Was the Outcome?

Once tracking began, the analysis showed the sales teams cut their total discounts offered by over 60%. Since revamping their sales and marketing objectives, this company has seen a 15% increase in competitive wins by price position alone — without discounting more than 20%.