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Discount management

Your situation

You have a larges sales department, employing both junior and senior sales staff who have been assigned various levels of authority based on their knowledge and experience. Sales produces a huge amount of quotes every year. The volume of orders is quite considerable. But you have noticed that, very often, you don’t get the prices you wanted for your products. The sales staff grants discounts a bit too easily at times. But there again, “squeezing hard” can be counterproductive. It makes them overly cautious and that can result in prospects taking their business elsewhere. You’ve already encountered that type of thing, and that’s the last thing you want. On top of that, your head of sales has had visits from unhappy customers who claim that they were promised discounts that your company reneged on later. It’s a worrying situation, because among them are customers with growth potential. In truth, your discount management is not running as smoothly as it should. You have drawn up rules on allowing discounts, but they are rather sketchy. How they are applied depends very much on the acumen of the individual sales employee. Actually, you don’t have the right incentives. And what about the bonus? It’s simply linked to the turnover and that just doesn't work.

The solution

In Sofon, you can lay down all the rules for discounts you want and link them to approval levels. This facilitates controlled discount management and your sales staff can aim for the largest possible margins. For instance, you can set up discount schemes for customer categories, markets, volumes, options, versions, and so on. They can include rules that allow various discounts, depending on the combination of products or product parts sold. You can make the schemes as subtle and as detailed as you like.

Offering a discount is linked to an approval function. If one of your sales reps wants to grant an impermissible discount or a permissible discount he or she is not authorized to grant, the approval flow will start up. In that case, Sofon will automatically ensure that the person, or persons, who do have the right authority, receive(s) a report requesting approval or a rejection of the discount.

Because the discount rules are incorporated into the structure, the sales staff will be more inclined to steer clear of maximum discounts. They will want avoid “trouble” with the manager.

In Sofon, the bonus mechanism is part of the discount management. The sales staff can see, in Sofon, their rewards for orders in relation to the discounts they give the customers. The higher the discount they arrange, the lower their reward is. This serves as an incentive for sales staff, encouraging them to get the most from the negotiations and to go easy on large discounts.

The advantages for you

  • Controlled discount management means that you won’t fall below the prices you want for your products, thus increasing your revenue.
  • If your sales staff know exactly how far they can go, they will moderate the number of discounts they grant, leaving you with a bigger margin.
  • Because the bonus mechanism is part of the discount management, you can link the rewards directly to the profit you make on the products.

This may also interest you

As an addition to your discount/rebate management, you can improve all the other aspects of quoting and contracting by introducing smart processes: quote creation, quote management, cost of goods sold, sales negotiation management, contract creation, contract management, authorization and approval, revision and version management and revenue recognition.