Educators are both polite and complex customers. Reading their interest and decoding their stalls can be very difficult, even for experienced sales reps, which means B2E companies often have unreliable sales projections. You can use this easy hack to periodically flush your pipeline of distracting debris. It will be a wakeup call for your young reps, and help them to focus on what is more than just wishful thinking in their pipelines.
Sales Drano works on that clog as effectively as the real thing by giving your reps a short-term, show-stopping promotional offer that will tip a waffling buyer over the fence or cut them loose. You’re thinking, “Oh jeez, she just means have a sale.” Well sort of, but this is a private sale to specific customers that have been sitting in the pipeline for longer than normal. Prospects that aren’t moved are either going to be revealed as not really interested or will share their legitimate concerns other than price that you can then address. All three outcomes: buy, dump, or fix are good for your business.
If you’ve been reading my blog you know I prefer showing value to cutting the price. I do not like quick discounting or an open pricing policy. The Drano strategy is a once or twice a year strategy for a very specific group of prospects.
There is an art form to running a promotion that works to clean up your pipeline. Keep these four keys in mind:
- This is an unadvertised offer exclusively for opportunities in the pipeline. Reps will want to use this special offer to close new prospects. If you are confident of your price point, resist. One way to handle this is to let each rep take the offer to the agreed upon pipeline list plus three no-questions-asked prospects. Scarcity makes them think and a little freedom makes them love their job.
- Protect the opportunities truly waiting for funds to open. Run Drano promos toward the end of a major funding cycle, so you don’t spill your candy in the lobby with customers that really were just waiting for funds to open up. The best windows are generally November 15 – December 31, March 1 – April 30, and late May through June, but some states and special funding sources will vary. Any 30-day window within those ranges is all you need to be successful. Longer, or doing this more than once or twice a year, and it becomes a new pricing strategy.
- Take a close look at large opportunities that have already received RFP or other negotiated offers. Sometimes the big ones are only stalled because a grant or board vote is taking longer than expected in which case it’s smarter to wait patiently and hold your price. Often though, large purchases are scary for districts and they can lose interest due to the shear work involved implementing. In those situations, a short term promotional offer can make a difference. At least you will have something different to say to the buyer on your next “checking in” call. Just be sure that if you’re adding a sweetheart deal to a sweetheart deal, it still makes sense for your business.
- Don’t let the reps know this offer is coming. That will first of all prevent leaks to prospects leading up to the promotion, or a lot of sketchy additions to the pipeline who will suddenly qualify. And second, springing it on reps adds to the excitement which will reflect to the customer. I have seen reps become absolutely rabid after being handed a weapon to close with. They will hit those phones with unbridled passion and they will get responses because they have some truly exciting news.
Here is a list of Drano offers which are all effectively discounts, but which are designed to maintain your product’s value in different ways.
- Straight discount. This depends on your margin and presumes you have already proven your price model is competitive. If you offer SaaS, a 20% discount is a show-stopper to almost any education buyer and will work like Drano on your pipeline. If a prospect turns down a 20% discount, they either:
- Don’t really intend to buy soon and need to be set back to “lead” as a pipeline stage
- Don’t have funds even close to your normal price and need to be set back to “suspect,” or
- Have some other objection holding them back that they WILL FINALLY SHARE when faced with a beat-the-clock show-stopping deal.
- Extended months. This is the rep favorite. Why? Their sales total, i.e. commission, remains high but the customer still gets the cost benefit of free renewal months down the road. Hidden benefit: Future renewals will be for one year at full price. The show-stopper amount for a buyer will be the number of months that push them into a new budget year. For example, if offered in February, giving them 4 free months takes them to July 1 the following year – an entire budget cycle for them without having to request funds. Schools LOVE that because sometimes they are sitting on some budget to spend today, but can’t be certain they’ll be able to have continuity with your subscription product again next year. If you try this in late fall, just offer 3 free months.
- Free training/professional development. The reps also love this because it doesn’t feel like a discount from their perspective. It will hold your SaaS products price for future renewals. It might not hurt you in the present much either if your training is a profit center conducted by internal resources. If your costs such as travel are high, consider discounted PD as a special. It can still be a show-stopper depending on how the school’s funds are ear-marked.
- Gift with purchase. Do you have multiple subjects or products to offer? Take a close look at what products that prospect was quoted. Offer a special bonus of an additional product if they buy the ones they are thinking about by the end of the month. This one can really wow schools and costs you nothing as they likely weren’t buying that which you’re giving away. But if they LIKE the gifted product – you’ve just added a renewal/repeat order opportunity for the coming year.
- Here’s a REALLY crazy twist. If you only have one subject or product, such as Math, consider partnering with another B2E company in a compatible but non-competitive business such as a Reading program. Bundle your products for combined savings. You both take a discount but you both are exposed to a bigger customer base. It pays to make friends in the business!
- Short subscription. This isn’t my favorite but I confess I’ve pulled this one out of the hat in times of true need. As the school year rolls on, districts have less confidence buying subscription products on a weird cycle. Somewhere around December you’ll have prospects concerned about finding those less plentiful mid-year funds year after year. Having a big pool of mid-school year renewals doesn’t make your life easy either. Consider a pro-rated subscription that takes them to a June 30 end date, but never sell less a subscription than six months and don’t use this strategy broadly or in a renewal situation.
Lastly, there’s an unintended consequence to prepare for. A recent buyer may hear about this promotion after they just paid full price. If a customer contacts you annoyed or simply asking if they can get in on that deal they heard about through a colleague, I recommend NOT refunding any money, but making a gesture that shows how important their business is to you. “Fran, I am very grateful that you’ve become part of our family and trust us with your students. While that offer Joyce took advantage of was a specific time-based promotion just like the car dealers do at certain times of the year, I’d like to show you how much we appreciate your business and extend your subscription 30 days at no charge.” Or offer a free peripheral or extra subject, 2 months free on their renewal, or a free webinar training from one of your on-staff trainers, or something specifically less valuable than the promotion Joyce got. If you give an inch and Fran asks for a mile, weigh what the long-term relationship with Fran is going to look like. It might not be worth keeping a customer like that.
One more idea to consider, particularly for SaaS vendors, works if Fran and Joyce are two building administrators within the same district. “Fran, I’m grateful for your business, yadda, yadda, yadda. It occurs to me that with Joyce now on board, that our solution is something that resonates with your district. If you’ll help me present to all the buildings at an upcoming principal’s meeting, I will match that deal and go one better—next year you’ll renew your subscription at a district discount.”
Bottom line is that you can improve the efficiency of your sales team with smart discount strategies that separate the interested prospects from the tire kickers. All sales managers need ways to rally the troops once in a while and Drano never disappoints!