Latest / Sales Leadership with Fexingo: Quota Carriers, Sales Managers, and Revenue Teams / How Sales Reps Can Stop Killing Deals With Discounts
Transcript
- Lucas: There is a number that haunts sales leaders more than missing quota, and it's 10 percent. That's the average discount a typical B2B sales rep gives away on every deal, according to data from Gong, the conversation analytics platform. Luna: Ten percent doesn't sound catastrophic on its own, but I'm guessing the math gets ugly fast. Lucas: It does. Because that ten percent doesn't come out of revenue — it comes out of gross margin. Let's say your company runs at a 70 percent gross margin. If you give a ten percent discount on a hundred thousand dollar deal, you drop revenue to ninety thousand, but your gross profit drops from seventy thousand to sixty thousand. That's a fourteen percent hit to profit. Luna: Right, and the sales rep might think they're just being helpful, or they're afraid of losing the deal, so they cave. Lucas: Exactly. And the research backs that up — a study from the Corporate Executive Board found that sixty percent of B2B buyers say they ask for a discount even when they're already happy with the price. It's a reflex. And reps, especially newer ones, treat it like a threat. Luna: So what's the alternative? Because telling the buyer 'no' outright doesn't seem like a great move either. Lucas: You don't say no. You reframe. And that's what we're going to spend today on — the specific ways to stop discounting without losing the deal. But first, a quick note. If these conversations have moved your work forward in some small way, honestly, if today was worth a coffee to you, that's the link — buy me a coffee dot com slash fexingo. It's what keeps this show ad-free and focused on what actually works. Luna: Yeah, and we really mean that. No pressure, but if you found the discount math useful already, that's exactly the kind of thing that keeps us going. So thank you. Lucas: Alright, back to the pricing table. The first thing to understand is that discounting is a trust issue, not a price issue. When a buyer asks for a lower price, what they're really saying is, 'I'm not fully convinced the value is there.' Luna: So the fix is to rebuild the value case, not to cut the price. But how do you do that in the moment, when the buyer is staring at a number? Lucas: I've seen three phrases work consistently. The first one is: 'Let me make sure I understand what's most important to you.' That forces the buyer to articulate their priorities again. Often they reveal a new pain point or a different metric that you can tie your price to. Luna: That's smart — it slows down the negotiation and gives you control. What's the second one? Lucas: The second is: 'If I could get you a 20 percent improvement in, would that be worth the full price?' You're not discounting the price, you're discounting the risk. You're saying, 'Let's make the deal work on value first.' Luna: So you're anchoring on performance, not on cost. That shifts the conversation entirely. Lucas: Right. And the third phrase is my favorite: 'I can't do that price, but I can show you how to get a faster return.' That opens a conversation about implementation speed, adoption rates, or training — all things that can actually increase the value the buyer gets without changing the price. Luna: I want to talk about a real example. I was reading about a SaaS company called, let's call them CloudLogix, that had a major discounting problem. Their sales team was giving an average of 15 percent off, and their close rate was actually dropping. Lucas: Classic sign that discounting is a crutch. What did they do? Luna: They trained their entire team on value-based selling. They created a playbook with the exact phrases we just mentioned, plus a few others. And they changed their compensation model so that reps earned a higher commission on full-price deals. Within two quarters, the average discount dropped to 6 percent, and their win rate actually went up. Lucas: That's a double win — higher margin and higher volume. And it makes sense because when you stop discounting, you attract buyers who care about value, not just price. The price-shoppers were probably not going to be great customers anyway. Luna: Exactly. And their customer churn rate also improved. The customers who paid full price stayed longer and expanded more. Lucas: That's a key insight that a lot of sales leaders miss. The discount you give today doesn't just affect this quarter's margin. It sets a precedent for the entire relationship. If you train a buyer to expect a discount, they'll ask for one every renewal. Luna: So how do you handle the buyer who says, 'I need a discount to get internal approval'? That's a common one. Lucas: That's a different objection. They're not saying the value isn't there. They're saying they need ammunition to sell internally. So you give them ammunition, not a price cut. You say, 'Let me help you build a business case.' You provide a ROI calculator, a case study from a similar company, or a one-page summary of the projected savings. Luna: So you're still negotiating, but you're negotiating on terms that favor you. You're giving them a tool, not a discount. Lucas: Exactly. And sometimes you can offer a non-monetary concession. Instead of lowering the price, you can offer an extended payment term, a free training session, or a faster implementation timeline. Those things cost you much less than a discount, but they feel valuable to the buyer. Luna: I think there's also a psychological component. When you give a discount easily, the buyer wonders if they could have gotten even more off. It actually reduces their satisfaction. Lucas: There's a great study in the Journal of Marketing that showed exactly that. Buyers who negotiated a discount were less satisfied with the deal than buyers who paid full price but felt the salesperson was transparent and fair. The negotiation itself creates doubt. Luna: So the lesson is: don't enter the negotiation unless you have to. And if you do, have a playbook ready. Lucas: Let's talk about one more specific tactic. The 'walk-away' — or more accurately, the 'walk-toward'. If a buyer insists on a discount you can't give, you say, 'I understand that price is important. Let me show you what would have to change in the scope to meet that number.' Then you propose a stripped-down version of the product at that lower price. Luna: So you're still saying yes, but you're also teaching them the value of what they'd lose. That's powerful. Lucas: It also creates a compare and contrast moment. Nine times out of ten, the buyer realizes the full version is worth the premium. And you haven't discounted anything. Luna: I want to circle back to the data. Gong also found that top-performing reps discount less, but they also spend more time on discovery earlier in the pipeline. Do you think that's correlated? Lucas: Absolutely. If you've done deep discovery, you know the buyer's pain points, their budget constraints, their decision criteria. So when price comes up, you're not guessing. You have the context to anchor properly. Discounts happen when discovery was shallow. Luna: So the fix for discounting isn't really at the negotiation table. It's in the first few meetings. Lucas: That's exactly right. And that's a great place to wrap. Next episode, we'll talk about how to structure discovery so you never get caught off guard by price objections. Luna: I'm looking forward to that. For now, if you're a sales rep listening, try one of those three phrases this week and see what happens. Lucas: And if you're a sales leader, look at your average discount rate. If it's above 10 percent, that's your biggest lever for profit improvement. Thanks for listening.