Many of us have had to deal with them, the salesperson that could be so desperate to make any sale that they keep on dropping the price till they get the order, or they have so little faith in their product / ability to sell it that they start with “and I can give you 25% off”. In one case I had to deal with ne that was both, started at 25 off and then went down.
While these can be somewhat managed by other methods we need to be aware that there is something just a little different about these people compared to other sales people, as you know people that enjoy selling are driven by needing a validation to their self-worth I.E. You bought this from me I must be good, and for most sales people, the bigger the sale (or net profit) they make a connection that follows this sale is better than that one so I mast be better than that person. Unfortunately for management the discount King has no scale of this sale is better than that one, their only validation is the number of sales so it is more important for them to make the sale and move onto another one instead of making the most out of each possible sale, obviously if left unchecked this can lead to serious problems.
The argument that used to come back at me was “well it is additional revenue to the company what does it matter? “
- If other customers get wind of the special pricing what is that going to do to your bottom line?
- Especially if it is some other salespersons account.
- At some point you will have a capacity problem, I do not care what you do, if you spend a significant portion of your time on low margin business you cannot be working on higher profit business.
- Others in the organization have to deal with the extra workload, and trust me they are pissed that they have to do extra work for less money.
What can you do
First, make sure compensation is linked to net profit not gross, if they are going to cost the firm it needs to hit them in the bottom line as well. Next put impediments in their way, figure out what the average selling price is for everyone else except the Discount King and then lock in an approval policy for any discounts below that point. In the end they have to modify their behaviour and if they cannot fit in with the rest of the team, you need to move them on for the good of the team.