How do you start managing sales discounts or decide on different terms that empower your sales and customer success teams to do their best work?
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If you have a good pricing strategy with an effective pricing model—maybe you have even raised your prices regularly—all that can be completely negated if you are giving away too much in discounts on the back end. So, getting your discounts under control with a sales empowerment matrix is a very important way to increase ARPU.
My guide for managing your team's B2B SaaS sales, marketing, churn, and growth metrics to get your go-to-market on track.
Make sure your sales team understands who has the power to grant discounts and to what degree. It helps to have an empowerment matrix that provides a quick overview of the approval authorities of various roles on the team. Such a chart shows who can give what kind of discount what is expected in return. You never want to give a discount away without getting something in return. It could be a pre-payment or a commitment for a case study. Discounts can also go further than just pricing. They can include payment terms, exposure, and different liability limits. Here is a list of things to potentially give away, and what to expect in return:
There are a few reasons to offer a pre-payment discount, including the net present value of cash vs. what you can get in the maximum lifetime value of a customer. Or the savings you can accrue in renewals. When thinking about what you can get in return for a discount, consider an opt-out strategy. This saves you money in accounting, continual sales, and collections. Saving money in these areas may be worth a discount, but you must be able to enforce it. Keep in mind that discounts only work when your product or service is recoverable if the terms of your agreements are violated.
Here you can download an example of a table to manage the empowerment across your team. Clarity will help the salesteam work together, and more importantly, this will limit the impact on ARPU by non-desired term flexibility and discounts.
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