Many SDRs offer discounts during the contract negotiation stage. However, that’s often not necessary. In fact, you probably shouldn’t be offering a discount at all.
This week on INSIDE Inside Sales, Darryl is once again joined by internationally recognized sales leader and author, Scott Leese. Darryl and Scott offer up strategies that can help you close the deal without having to resort to offering a discount. They share valuable advice such as ways to make your value clear and powerful, as well as what to do when your buyer needs to show a win in negotiations. Learn how to hold the line on your price, as well as your commission on this episode of INSIDE Inside Sales!''It's really important to know that sometimes you have to go back in order to move forward with the deal.'' 🎧 Listen as @thescottleese walks us through winning negotiations without pulling out the discount card. Click To Tweet
Host: Darryl Praill, VanillaSoft
Guest: Scott Leese, Scott Leese Consulting
Darryl Praill: I gotta tell you guys, you probably hate me. And I don’t mean hate me because I’m annoying, I get that. I don’t take that personally at all. You probably hate me because if you were trying to sell to me, I’m that guy, I like to negotiate. And yeah, hey, I’ve sat here and I’ve told you what you need to do. You need to set the value upfront. If you set the value upfront, if you property qualify me, you understand my pain, you actually are able to quantify the pain. So Darryl, that problem you’re having, how’s that impacting you? Is there a financial consequence? Is there an operational consequence? Is there a competitive consequence? Talk to me and well it’s probably killing me by 10%. And what, 10% of what? 10% of a million bucks, so $100,000. Yeah, $100,000, Now you think about it, I think you’re right. I think my pain is worth $100,000 and you come back and say, well, I can say this for $50,000. And I say, I don’t want to pay $50,000. And you say, well, I set the value at 100K.
Darryl Praill: So what am I missing here? That’s 50K in the first year more in your pocket let alone year two, but whatever. I mean, you get the idea. You set the value upfront, it makes it much more difficult for me to negotiate. And for many people that works, it genuinely does. And you need to do that, that’s the best practice. But here’s the thing, here’s what people do don’t tell you when they say you gotta set value, you gotta set value, you’ve got to set value, what they don’t tell you is this. If you’re selling to me, you may have noticed I have grey hair. And in fact, my kids would say, it’s long past gray it’s just white. So what does that mean?
Darryl Praill: That means I’ve been doing my gig for a long time. And I’ve been doing it for a long time. Like when you’re selling to VETO, that very important top officer, then we know what you’re doing. We’re onto your game. We know when you’re trying to set value that you’re trying to set me up further down the road so you can justify your price. You need to know that, you need to know there’s a good chance we know what you’re doing, we bought so much stuff, we could probably do the sale for you. We can anticipate your next step. But let’s fast forward. You got me I’m interested, you’ve made a great business case, great value prop, I’m active. I’ve got, you know, the whole team on board.
Darryl Praill: We’ve had technical due diligence, we’ve had financial due diligence, we have operational due diligence, everybody’s bought in. We have consensus, you’ve upsold me. We’ve gone from one license to 12 licenses. You sold on the bonus, the extra Cadillac, and everything else. You, my friend, have done textbooks selling, I applaud you. But now write that final appoint, that final point where you’re gonna put that number in front of me and say, okay, based on I’ve done all you’ve got all these options and widgets and whatnot, and here we go, and we did the proposal, boom there’s your price Darryl. Shall I send you the Docusign now? Let’s just get this over with. We can onboard you this week.
Darryl Praill: And that’s when I say to you: Yeah, no, I understand the business case. I really understand it, but I’m not gonna spend $50,000 on that. And here’s why and guarantee you, I will have a really good answer why. Because again, I have white hair and guarantee you that what I’m saying to you is partly from me, but partly from others. Guarantee you that my CFO or my CEO or my COO has said, yeah, Darryl, can you hammer on that much more? And I need to go back and show a win. I need to show that I can negotiate. I need to show them that I was able to do what I was able to do. I also guarantee you that many of my colleagues, perhaps me, we’re not so good at conveying the very business case that you made with me to justify this investment.
Darryl Praill: So while you’re relying upon me to communicate to them, the very benefits of this and the ROI, you know what I may, I may not. My schedule is busy, I don’t really care, I’m not the best at communicating. I understand that intellectually, but me verbally, I suck communicating and you didn’t go talk to them. So you didn’t convey it because you dropped the ball, which is a whole other question. Why didn’t you talk to them? It’s all about negotiation right now, kids. This is where you’re at. So in past shows, we’ve talked about how to avoid getting here, but now you’re here. So what do you do when you’re here?
Welcome Scott Leese
Darryl Praill: Well, wouldn’t it just be interesting that the other day, my good friend, Scott Leese did a wonderful, wonderful post on LinkedIn. And it starts off by saying,” You don’t have to discount or alter your contract terms, at least not all of you.” So in this post, he does a wonderful story. You should check him out, by all means, go follow him on LinkedIn oh my God. Okay, between you and I, side story, he’s annoying as hell because he’s fricking everywhere. I’m like Scott Leesed out, anybody else here, Scott Leesed out. Cause he’s just like everywhere. And I say out with a Canadian accent. Yes, I know. So there’s a reason why he’s everywhere because of nuggets like this.
Darryl Praill: So I said to myself, hey, I saw myself in that post and I said, I got to get him on it. Here’s the irony I wanna get him on so he can teach you how to deal with guys like me. And maybe secretly I’ll listen to what he’s saying. And if you’re specifically selling to me guys I may do some voodoo magic. That counteracts what he’s doing, but that’s another day. Scott, my friend welcome back to the show. Glad to have you here, you’re all smiles for those who are on the audio-only version he has got his wonderful hat on it he always does this kickass beard. He’s smiling. I’m told, he’s told the kids stay off the gaming system so we can have amazing quality here. So he is committed. Welcome to the show, sir.
Scott Leese: Thanks for having me back. I’m sorry that your Scott Leesed out.
Darryl Praill: You are everywhere, I’ve picking lessons from you. I’m like how the hell did he get on that show? Who the hell invited him over there? Why aren’t they calling me? You know, basically, I have envy. I am a small man Scott. I just want to be you when I grow up. Wow, you’re everywhere.
Scott Leese: It’s definitely exhausting but It’s a lot of fun at the same time, especially right now. And when you love what you do and you’re passionate about things, it’s easy to talk about them and get to have fun conversations with different people from all over the world. So, sorry to say, I don’t intend on slowing down much anytime soon.
Darryl Praill: Scott if you don’t know him, he’s the CEO of Surf and Sales. He’s a killer sales trainer, six times Startup Leader, three times Top 25 AA-ISP Inside Sales Leader, twice founder, one-time author, and of course, beyond that, he’s got a killer retreat he does in Costa Rica that I think he does just so he can go down there and hang out. But that’s just my biased opinion. So he’s the machine, he’s got a fantastic podcast him and Richard Harris, The Surf and Sales Podcast. I’ve been blessed to be on it. It’s a really good show. The two of them are really good, complementary perspectives and personalities.
Darryl Praill: So if you’re listening to the show, clearly you like podcasts. If you haven’t subscribed to the Surf and Sales podcast, that’s my shout out to you to say, give it a listen. I think you’ll like it. I know, I like it. It’s really informal. It’s really informal, that’s what I like about it. A lot of storytelling, a lot of anecdotes, a lot of back and forth. So you’ll like it’s a good listen.
Value vs discount
Darryl Praill: Scott, I gotta ask. I mean, this post jumped off the page at me, but there’s always the story behind the story. What was the catalyst? What led to this post? What’s the background? And you alluded to a bit of this in your post, so maybe just bring us up to speed.
Scott Leese: Yeah, well, it’s a true story and it just happened last week. So I’m the interim CRO for a company right now in the automotive industry that sells a digital retailing solution. So it’s really kind of right place, right time. Exciting company, exciting product, it’s called getprodigy.com and they’re helping dealership sell cars online. So it’s a small team, there’s three SDRs, three AEs, and so we got a bunch of inbounds, too much for the AEs to handle any demos for. So, I put this little contest in place where the SDR would have a chance to run some demos and do the full cycle for the first time. And so this relatively new SDR does a great job, runs through the demo, and gets a contract out. And the contract is mid-five figure kind of deal.
Scott Leese: So it kind of standard, mid, low-mid-market kind of a kind of sale. And, you know, he’s all excited. And this is like late Thursday evening and they’re supposed to follow up on the next day on Friday. And so all of a sudden I get some messages on, on Slack. That’s like, hey, the guy’s ready to do the deal sign, but you know, he wants to do 30% off. And I’m like, no, there’s no reason for us to do that. I don’t understand why we need to do that right now. We’ve got a premium product, we’re the fastest-growing company in this particular space. We’ve got a lot of wonderful testimonials. We got a lot of clients coming on board. I think that you need to go back and have another conversation about the value that we provide and specifically the value that you’d be able to provide them and the ROI that will come their way and the pain that will come off of their table and so forth.
Scott Leese: And so, he’s like disappointed and it’s all right, and then his manager reaches out to me and tries to defend the rep, which, any good sales manager’s probably gonna do, especially they’re trying to help this person get their first deal. And so, a couple of hours come back, go past, and then I get pinged again. And this time it’s both of them on the phone calling me and they’ve come up with some new kind of fandangle contract structure where there’s nine months worth of free trials of different products that have been a-la-carte put together. It’s just this like whole thing that we don’t do. And I’m like, guys, this is not gonna fly, okay. I hate to be the bad guy here, but you’ve got to go back to the beginning and start over. This is not a deal and they’re like, yes, it is a deal like this is a deal that guy’s ready to sign. I’m like, no, you don’t have a deal at all.
Scott Leese: So you’ve got nothing to lose here. So please stop telling me that you’re about to lose a deal because you don’t even have a deal. You’ve pieced together something that makes no sense and doesn’t fit into our structure and everything. So they’re all pissed off at me. They got their teammates to be, a little upset with me as well. So I’ve got six to eight people who are annoyed with this new, interim CRO who’s, not being helpful in their eyes. So I told them to go back and get the guys on the phone, the prospect on the phone, and resell. And I don’t hear anything the rest of the day on Friday. I don’t hear anything on Saturday.
Scott Leese: And all of a sudden at 10:30 in the morning on Sunday, I see a signed contract come through, it’s this guy’s contract, it’s full price. It’s the full contract term. There’s no shenanigans going on or anything. And then I get this Slack message that says you were right. And we got the deal and I’m super fired up pumped for the team and for this kid, and I hope it’s a really good lesson for the whole team and for everybody out there that, if you have, you’ve done your job, right, the value should be clear and powerful. The ROI should be clearly communicated and understood by the prospect. And you’ve got to just be willing to hold the line and I think people right now, are little gun shy, I think that they, they feel, businesses might be strapped for cash and deals maybe are hard to come by, and we should be super flexible and all this kind of stuff.
Scott Leese: And there might be some truth in that. And I would never say that every deal and every industry, is the same, but you don’t have to discount, not everybody. You can hold the line, you can push back and you can go back in the sales process. I think people are terrified of the thought of going backward in their kind of sales process and in their stages. If I’ve gotten all the way to the contract stage, why would I ever go back to discovery again? And why would I go back to discussing the pain and the problems, and why would I have to go back to discussing the value?
Scott Leese: So it’s really important to know that sometimes you have to go back in order to move forward with the deal, as different as the environment is out there right now, some things are the same. And I would have given this same advice, pre-quarantine, and I really encourage everybody and not just account executives, but their bosses as well, to help their AEs hold the line and not be intimidated over price. Because it has real meaningful impact, not just on your quota, but also in your wallet.
Darryl Praill: So you’ve hit some interesting points that I want to talk to. And I’m gonna speak as a buyer, not just a podcast host if you will. You remember how we opened this up folks? I said, you know, you forgot to set the value in, in new, all the song and dance you should have done. And now you’re here and you recognize what you should’ve done. It’s too late now because now you’re here. What do you do? Scott just gave you the answer. You give a great story, but the answer is real simple. You go back. Now you don’t want to go back. I get that, I truly get that, because you’re risking losing the deal and you might lose the deal, but how many, as Scott’s story ended, will you get? I suspect you’re going to get a lot more than you will lose. So yeah, you gotta go back. He’s spot on.
The negotiation stage
Darryl Praill: Now I do want to share a buyer’s point of view though. I mentioned that I want to share a buyer’s point of view here. So you understand I’m not just trying to be a dick and discount, all right? So this is because I think if you understand me as a buyer better, you’ll understand where I’m coming from. You’re looking at it solely from your point of view, I’ve put all this time in, I’ve set the stage. You said this, you said that. I construed that as a full steam ahead. Why are we now negotiating on price? You’re being a dick. No, no, I’m not. If I save money here, it means a $50,000 deal in the example we used. If I can get it for $40,000, that’s $10,000 I can invest elsewhere and help my company grow.
Darryl Praill: And if my company grows, I’m gonna come back to you for more seats or more add-ons. See how that works? If I’m successful, you’re successful. That’s what I’m thinking. All right, that’s what I’m thinking. The next thing is value is gonna be subjective and your view is biased. You need to understand where I’m coming from and by the way, yes, sometimes my view is biased too, but it’s not just your point of view. Now here’s the last thing buyers will never tell you. We actually secretly deep down, we respect pushback. We’re gonna push hard. We’re gonna try to intimidate you. We’re gonna try to use the age card, experience card, we’re gonna threaten to leave and some of us will do it, but as a whole, when we hang up, this is what we’re doing.
Darryl Praill: Son of a, why the hell won’t he discount? Damn him. Doesn’t he understand I’ve got another offer, I have another vendor out there? But I wanted you, I chose you. I’m emotionally invested in you. I’ve talked about you to my peers. So, that’s where I’m coming from. Help me get a good deal. Now, in that case, Scott, I’ll be telling you, I wouldn’t have paid full pop, but I would have wanted something cause I need, I need something maybe it’s full pop, but you give me a little extra somewhere else. I need to me be able to show a win somehow that there was a negotiation. What do you respond to that on that? Me as the buyer, I need something from you.
Scott Leese: I think that’s totally fair and I think it’s appropriate. I think that price and contract term and everything just ends up being a mutually agreed-upon number. That makes sense for both parties. So I expect you to want something, right. And I think there’s absolutely nothing wrong with that. So if you are gonna push back hard on me Darryl, two, three times on this, then I think it’s completely within my right to ask for something. Some type of favor or, you know, quid pro quo. So I might add no pro I might ask you.
Darryl Praill: No quid pro quo.
Scott Leese: I might ask you to be willing to if you’d be willing to do a case study for me or a testimonial or appear on.
Darryl Praill: Yes.
Scott Leese: Yeah and I think that that’s fine because you’re getting a bit what you want and I’m getting something that I want and I need as well. You’re getting something that you need that will help your business. I presumably would also be getting something that would help my business and it helped me get future deals. So I think it’s that ask. And I don’t think that ask happens enough. I think that AEs and sellers too often get the pushback from somebody like you who’s a seasoned buyer and they buckle and they get nervous and they’re like, this guy is gonna go away, the deal’s gonna disappear.
Scott Leese: And it’s like, hold on, take a deep breath. He’s not going anywhere. He’s having this conversation, presumably because he knows we’re a premium product out there. He knows that we are the vendor that he wants to choose. He just needs to show that he’s done his diligence and show his boss that he gets a little win under his belt. And his ego needs a little bit of a win as well. So I think just in having that dialogue and that back and forth, it’s 100% possible to land on something that makes sense for both parties. For the account executive, even if I end up discounting for Darryl, it might not be the 30% that he was asking for.
Scott Leese: But what if I got him to take only a 10% discount and do some of these things that I’ve asked him to do. I’ll tell you what Darryl I’ll, do the 10% discount, but I need you to agree to be on our podcast or show up on this webinar for us, do this case study for us, write a testimonial once you know, you’re onboarded, and the product is implemented and it’s going well, and that kind of thing. Is that something that is gonna make sense for you and leave you feeling like you’re in a good place and got what you wanted?
Darryl Praill: And the answers could be yes every time yes.
Scott Leese: A 30% discount is very different than a 10% discount. I have this private sales coaching client based in Australia, and he sells for, I believe the second largest CRM in the world. So you can do the math and figure out what company I might be talking about. But we walked through his entire catalog of deals that he’s closed in 2020 so far. And he has an average discount on each particular deal of number X, I won’t say what number. So I had a conversation with him and I was like, let’s figure out the difference it would’ve made in your, in your quota attainment and then in your wallet, if you would have, instead of giving away X discount, you gave away nothing.
Scott Leese: And then if it was not X, but a Y discount, what would that look like? And with the math that we did, there’s $24,000 pre-tax, $24,000 in extra commission that this particular guy could have earned, not from going from his current average discount to no discount, but just from going from his current average discount to a smaller discount number. It really, really has a huge impact on your commission check. And I wish people who are selling right now would take some time and do that math to really understand the impact that it’s having.
Darryl Praill: Okay, so we’re gonna take a quick break. We’re way behind schedule and that’s okay because this has been a killer conversation. We’ll squeeze this in, and I wanna come back home and explore that more. And I wanna throw something out here when we come back as well to hook you on what else you should be asking for if you have to negotiate beyond that case study or being on the Surf and Sales Podcast. Don’t go anywhere, we’ll be right back.
Changing the company culture
Darryl Praill: Okay, so I wanna come back to the whole compensation impact, but one of the things I’m surprised you didn’t say, and I’m gonna kick myself in the ass for doing this. But beyond everything in that negotiation that you can ask for in that give and take about case studies or podcasts or press releases or whatever it might be. And by the way, every single one of those things put them in the proposal in writing. It’s not the gentleman’s agreement anymore, do that. You can ask for referrals.
Darryl Praill: I’ll give you a discount, look at that, Scott’s got a big smile on his face, but to get this discount, I need three names from you, of trusted people who you know directly firsthand, like best buds, that you think would be worthy of consideration and whom you will have a conversation, you will make an introduction for me. You do that, and I can make up the lost revenue perhaps on one of them, or at least our conversation on the road. Still asks for the case studies and the press release and the podcast, but ask for the referral, too many of you don’t do that. I hate giving referrals because then my reputation’s on the line and it’s out of my control, because if you botch a deployment, then it’s on me.
Darryl Praill: So you gotta make sure you pre-empt that, okay. You talked about the consequences on my check and that is huge my take home. Now, the one thing is I don’t wanna feel like a transaction to you as a buyer. I don’t wanna feel like I’m taking money out of your pocket, but I do want value. So you can’t make me feel guilty about the consequences of that. But the reality is you’re right. But here’s the kicker, and you talked about it many times, the leadership, the sales manager is behind the rep saying, yeah, give the discount, which is affecting not just your take home, but it’s affecting the company’s profits and margins as well, which affects their growth. So how do you change that culture? And I know this is a bigger picture. This is not just one rep. How do you change that culture?
Scott Leese: As a rep, how would I change the culture?
Darryl Praill: As the rep, or you know, the fractional CRO, both of them.
Scott Leese: Well, I actually think it’s significantly easier as a fractional CRO, or a head of sales to change the culture because you’re the one who’s setting the tone for the whole organization. If you allow your sales managers to kind of get pushed around on price or contract terms and things like that, you’re not teaching your sales managers to teach the AEs to ask for referrals and ask for case studies and testimonials and things like that. Then you’re doing everybody in the whole organization, a disservice. So significantly easier I think, to make that change in a leadership role.
Scott Leese: If I’m an AE right now, and my manager is pressing me to take the discounts and just get the deal over the line at any cost, I candidly am questioning this particular sales manager’s motivation. Because just as you, as a buyer, didn’t want to feel like a transaction or feel like dollars and cents, I don’t want to feel that way to my sales manager. And so I’m thinking, well, I wonder if the manager just needs this deal for their own paycheck and their own commission check. I don’t know that they have my best interest necessarily in mind right now. And I wonder if they’ve done the math for me. So the best thing that you can do to change the culture is hold the line and get better during this contract negotiation phase and then start to teach your colleagues and teammates around you.
Scott Leese: Don’t keep information to yourself, so you can stay number one in the leaderboard or whatever. Help everybody around you, right? And if you go from one AE on the floor to two and three and four who start holding the line, I think the culture starts to change. It’s just the belief system now is that, wow, we don’t have to discount in order to get a deal. People are paying full price during quarantine. People are doing two and three-year deals right now and not just month to month deals. So the best way to change the culture as an AE is to get really good at this stuff and put it into practice in action. And then go ahead and lead from the floor. Be sort of the captain if you will, and teach everybody around you what’s working for you.
Darryl Praill: So building what Scott said, I would build a big part of this is communication. Whether you’re a rep or a sales leader, this applies equally, the angle is this, you’re gonna communicate proactively, okay kids. I, we are gonna negotiate or discount less. Are we in agreement? If we do this, this is what it means to the company’s revenues and margins, this what means to your commission check. Now, that means we’re gonna lose some deals, but it also means we’re gonna get some bigger deals. So we’re gonna circle back in 90 days time, and we’re gonna compare the average discount and what it means to the average reps, increased commission check, the average margin for the company, and we’ll compare and contrast. Are we in agreement on this experiment?
Darryl Praill: If you communicate and get buy-in and you understand you’re gonna measure the results, it makes a dramatic difference. And it makes it a hell lot easier. Cause how can they say no to that? Anyway, that’s just my point of view. Okay, here we are. Let’s recap his post. He said a lot of things. He had three lessons in his post. He gave us more here. What he said was when it comes to discounting how to handle contract negotiation, because here you are one, if you’ve done the job right, then the value will be clear and powerful. So do the job right the first time. If you didn’t do the job right, go back and do it again, go back and do it again. When you get to that point, you need to hold the line. And as a rep and a sales leader it’s gonna help you get better and make more money.
Darryl Praill: Four, as different as things are today, they’re still the same. Deals are still getting done, negotiations still happen, there’s still signing long term deals. So don’t use that as an excuse. And five, and we’ve alluded to this already, but you’re gonna make a shit load more money as will your company. And that means you can go and buy that special wonderful brand new iPad, 12.9 inch, iPad pro 256GB with the magic keyboard. If that’s what you want, that’s what you can do. Or you can just reach out and buy yourself a cool mic like I’ve got and then get Scott Leese on your show cause he does every single show in the world. He’s the man.
Darryl Praill: Scott, I’ve had a lot of fun talking to you today, sir. Kids, you know where to find him. He’s prolific on Twitter. He’s on a zillion Zoom calls. He does an amazing coffee talk with Amy Volus. I love it. He was recently on the UK versus USA winning team, the grand debate where Scott was the team captain. And I might say potentially the MVP. That my friends is Scott Leese, a two-time panelist here on the INSIDE Inside Sales show. Thanks for joining us again folks. We’ll do it again next week. In the meantime, happy selling and stop your discounting.