5% difference won’t move the needle… at least, do 10% if not more
Plus, psychology-wise, the approach is wrong. You’re not playing on loss aversion by providing 30% now and 25% later, because your lead is still getting a discount - so he is not under the approach of losing anything! Which is the whole (psychologically proven!) point of a buy now discount.
You should try a 10% now or nothing later : - the gap is much higher and may move help move the needle especially if your ACV is quite high - you’re really playing on loss aversion by not providing anything the next month
I believe you could do the math with 20% now or nothing, and still make much more (and accelerated revenue) in doing so.
Last but not least, I don’t know what you’re selling, but your buy now discounts are way too high if you’re in a SaaS business. To me, this will send the wrong signals to the buyer that - you’re intentionally overpricing to provide systemic discounts. This is not the right approach to building trust with your lead (be it in SaaS or any other business) - you’ll have problem providing additional discount for committing annually if you’re already doing 30% for a buy now decision
Then again, if you’re selling carpets or cars (one-off sales), such cheesy tactics can work…
I think a better approach is to tackle this from what the cost to them is if they wait. What's that cost to the customer (in benefit, whatever that is) if they don't decide to use your product right away? What do they lose if they don't get started now? It's a much better "fear" tactic than pricing, and you can tie it back to value, which is an overall better discussion.
I’m often on the receiving end of the “buy now discount”, I’ve always hated it - it feels a cheap approach - 100% of the time, the sales reps attempting the buy now had no other leverage. Either their product is undifferentiated to competition (and you can’t blame them), or they just didn’t spend enough time trying to build need with me (bad approach…). - It never moved the needle for me to buy sooner than anticipated. I’d even go as far as say that a buy now discount on a undifferentiated product can easily be forced the next month. Wait until end of month when your rep is closed to not hitting quota, you’ll mysteriously get the same discount
To me, the buy now discount is a looser/lazy strategy. Part of the reason I don’t allow it in my org
This is a great comment. I’m not a fan of it either, but my VP is. I have a sales cycle that is dragging out but it honestly just comes down to management wanting them to buy in our timeline and not theirs. So, I’m not optimistic that their cheesy sales tactic will do anything other than alienate the buyer
You’ve got your problem right here. I’m curious to what you’re selling exactly but I’m a big believer that the only way to accelerate a sale is to build around the need, and cost of opportunity of waiting, business wise not discount wise.
But that is something out of a VP’s control, which is also tough to teach to AEs… thus cheap tactics