Sales Tips: How to Avoid the Discounting Death Spiral
11 Jun 2014

Sales Tips: How to Avoid the Discounting Death Spiral

By John Holland, Chief Content Officer, CustomerCentric

11 Jun 2014

By John Holland, Chief Content Officer, CustomerCentric Selling®

spiral.pngI was working with a client a few years ago. While I was onsite the CEO and CFO were huddled to discuss pricing on a transaction for a very large prospect. I soon learned they had been negotiating for over two weeks. Over that time the pricing had eroded to the point where they were actually concerned whether the transaction was going to be profitable.

Parachuting in from the outside, it seemed clear they were the vendor of choice and that they were in a death spiral of discounting. My suggestion was they had to say “NO” to any further reductions. They pushed back on those suggestions until I told them that if pricing was reduced any more they should probably withdraw.

Within a day the transaction was finalized, but it was painful to consider how much money they left on the table. Buyers understand that the longer negotiations take, the lower the ultimate pricing will be. Once you begin to discount, it is difficult to stop the bleeding. In our negotiation module, we show sellers how to withstand a maximum of 3 requests for lower pricing and then utilize a “get-give” approach so that any conditional concessions are offered only after buyers have agreed to something the seller has asked for.

This technique can prevent the discount death spiral that buyers try to orchestrate.

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