We’ve been running an A/B test at SaaStr for 5+ years now. As the SaaStr Annual comes up, we run 2 campaigns at the end of the month. One offers 30% off tickets, “expiring Monday”. The other just says “ticket prices going up on Monday.”
Guess which one performs better? The latter. And it doesn’t even require a discount at all.
Think about that for a second. Urgency (ticket prices going up) performs more than twice as well as a rather large discount.
And this is a key part of the art of sales. Using discounting the right way.
Let me share another extreme story from little ol’ SaaStr. We just had our first rep pass $10,000,000 in lifetime sponsor sales. But we also had another, a few years, back that only closed $7,500. How could he close so little, you might wonder? One reason was it just wasn’t a good fit (and that’s on us). But the other reason is mis-using discounting. This rep didn’t really understand the buyer or the product, so he used the only tool he had, a massive discount. And when it didn’t work, he discounted more. By the time the deal finally cleared, he’d discounted a $60k sponsorship to $7,500.
(We had to apologize and unwind it after).
That’s clearly discounting used the wrong way. Not to enhance an already existing (if sometimes artificial) urgency, but out of desperation for not having any other way to get a deal closed.
That’s the key insight for most deals, especially mid-sized deals. Not to confuse urgency and discounting. Just like “Free” isn’t a marketing strategy, “Huge Discount” isn’t a sales strategy. Because Free doesn’t create awareness, and Huge Discount doesn’t create urgency. Not on its own.
So yes this is a simple post, but a few take-aways:
- Creating Urgency is some of the top magic in sales. Sometimes, it’s already there. Sometimes, the buyer has already done all their discovery and just has a few questions. But most of the time, no one really needs to buy this month or this quarter. Not really. Creating urgency is something the best in sales are just magical at.
- Discounting can help close it out. But discounting doesn’t really create urgency before then, or on its own. Of course it doesn’t. But it can get you from the red zone into the end zone. It’s a final piece, once there is almost a verbal commit, to getting to verbal commit.
- Overdiscounting therefore accomplishes nothing. Some sales reps will push discounting to the max, and there’s a reason you need controls here. It’s not really what creates urgency. It’s what helps move from “soon” to “OK now”.
- A “no discounts” policy can sound great, but you’re taking away a key tool to finalize the deal. No discounts won’t hurt your ability to get folks into the funnel, into trials, and into pilots. But it will rob your sales team of that one last tool to get a deal closed this month. And it’s so commonplace, mid-market and enterprise buyers expect it.
So watch out for mis-use of discounts. It’s almost always the sign of a VP of Sales that isn’t going to work out, or a sales rep that just lacks confidence and/or training. When the sales team is small, be very aware of it.
But do listen for how they create urgency. And give them the freedom to discount to finalize a deal that’s already got a ton of momentum.
A related post here:
