This month, I had the pleasure of interviewing Paul Hunt, the President of Pricing Solutions. In the time we had together, we covered a lot of ground—from diagnosing and addressing the real causes behind discounting problems in the field to getting executives to recognize the need for change.
Playbook subscribers can hear the interview — Fixing the Root Causes Behind Rogue Salespeople — in its entirety, of course. But for our newsletter readers, I wanted to pass along a few of Paul’s insights…
We were discussing how Pricing Solutions is often brought in by companies that think their sales team is out of control. These companies see a lot of negotiation and discounting taking place, so they naturally conclude that their sales team is somehow falling down.
But according to Paul, there are usually deeper issues at hand:
- Ineffective Pricing Architecture — When a company’s pricing architecture is based on cost or margin targets instead of value, and the underlying segmentation model is overly-simplistic, salespeople have no choice but to use discounts as a refinement mechanism.
- Weak Value-Communication — When marketing groups fail to equip their sales team with the communication tools to effectively communicate and demonstrate value to specific segments of the market, salespeople will again rely on discounts as a means of compensating.
So, while it may be easy to point fingers at the salespeople negotiating the deals and constantly asking for discounts, very often it’s the system that’s broken—and it’s really got very little to do with the salespeople.
In fact, after an engagement where these types of deeper issues were identified and addressed, a seasoned VP of Marketing told Paul, “I always thought the sales force was the problem. Now, I realize that we’re the problem.”