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The Great Pull Forward Rush

Ever since I started doing digital marketing way back in the 1990s, there has been an incredible rush to pull things forward.By pulling things forward I mean capturing demand or dollars before other people do. So that's the reason for Black Friday and July sales. That's the reason for October blowouts. That's the reason for people starting Black Friday previews at the earliest possible moment they possibly can. And the reason people do this is getting the dollars now makes them worth more than getting the dollars later.

Back a thousand years ago when I was the CMO of Karmaloop, we were heavily promotional. We regularly ran brutal promotions at the end of the month, or the end of the quarter, or for a holiday - anything to juice the conversion rate. The impact of this heavy promotion strategy was always the same:

The Holiday Hangover aka The Promo Drought aka The Post Promo Pause

When you use discounts to get your purchase to jump to the front of the line, you are essentially using that discount to pay for the revenue. And this has a couple of amazing impacts:

1. It takes money out of the market. People and businesses only have so much money to spend. If you get them to accelerate their spending by offering a discount, that money leaves the market meaning it's not available to spend later.

2. You have successfully captured demand but a little bit out of turn. And most of the time capturing demand out of turn is good because that means dollars don't get spent at other businesses.

That's Mostly DTC Consumer Spending Theory - But B2B Sellers Do It Too…

B2B sellers pull dollars forward in a different way. Certainly SaaS companies and all sorts of companies will give you discounts if you buy before the end of the quarter or the end of the year. And that now is sort of the regular tempo of business. But you, as an agency, might actually be trying to pull dollars out of the market and helping them land in somebody else's coffers.

I don't mean that you shouldn't give discounts…because sometimes you should…it is an effective way to close a deal. The other thing that agencies try in order to pull dollars forward is to offer guarantees and promises. The idea behind discounts is that the risk of working with you is reduced by the amount of this discount.The idea behind guarantees, of course, is total removal of risk.

Often these things are called conversion enhancers or, in the parlance that I use, a conversion hammer. It smashes out all of the doubt. And those conversion hammers can be incredibly powerful. But in the immortal words of Spider-Man's Uncle Ben…

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As Per Usual, Uncle Ben is on the Money

in the world of B2B sales you aren't likely to have that same sort of holiday hangover where you've taken money out of the market and then can't get your regular purchase the next month. That's just not the tempo of B2B purchases.

It's much more likely that you abuse the power of the conversion hammer by bringing it into the conversation before you've developed the trust to use it. It's your responsibility to have all of the trust needed from your prospect so that when you bring out the conversion hammer, it creates urgency, not simply a desire to reduce risk.

This is really a crucial distinction because discounts, in the world of B2B, ostensibly increase the ROI of whatever it is that you sell. You, as the seller, are taking less money to create more value for the buyer. That isn't really a fair trade.

What we really want is the discount to accelerate the timing of the decision…not if the decision is going to be made. a discount ought to be used to move a purchase from November to October. A discount shouldn't be used, or a guarantee shouldn't be used, to move a purchase from never to now.

Why not? Capturing a Client You Weren't Going to Close is the BEST Way to Use a Discount, Tim!

No.
Just plain no.

if you haven't built enough trust to earn the sale, then paying for the sale through a discount is only going to generate a client that isn't aligned with you. Agencies abuse the power of the conversion hammer when they substitute a discount for trust creation.

The discount impacts your margins, but it does get you revenue. However, you now have a misaligned client providing you with lower margins. Misaligned clients are constantly asking you to do things that you don't normally do because their needs are misaligned with your services. Therefore, the benefit of that lower margin revenue is completely negated by the additional work, thinking, and process you have to apply to create a good experience for that client.

The conversion hammer, in this case, landed you a client that doesn't provide you with any long-term benefit. You get a high-work, lower-margin engagement that likely doesn't really serve either party.

From The Blatant Self-Promotion Department

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Back To Sales & Trust…

When you offer a discount before trust is established, you're generating a lower-value or maybe even a no-value transaction. But if you have built the authority and trust and explained to your clients so that they would purchase anyways, the discount can effectively pull dollars from the future to the present. And unlike DTC sales, there's no promo hangover.

Trust is the engine of yes. Trust is the creator of contracts and SOWs. Trust is the thing that allows your prospect to be vulnerable enough with you to become a client.

Don't use discounts in place of trust. Discounts are a very cheap form of currency. Trust, like gold or bitcoin or something, is a store of value that does not depreciate with the passage of time. The very best thing that a discount can do is accelerate time. That's pretty rare, actually. Typically, what discounts do in B2B are flip the risk-reward profile so heavily in the buyer's favor that neither you nor they consider alignment and possibility of mutual success. That cheap currency devalues what you deliver. That cheap currency devalues the impact of your work.

Use The Power Wisely…

there are all sorts of ways to close deals. The only way that really matters, however, is when the prospect trusts you enough to believe that what they are paying for is worth more than what they are paying for it. If you create that perception through discounting, you've given your prospect a distorted lens of value. Discounting in the absence of trust creates a fun house shaped out of proportion deal. And in some ways, the buyer of a low-trust high-discount engagement is going to expect you to look and act like that fun house mirror version of yourself. I don't want that for you.

Discount to accelerate time after you have created trust if you must. Don't discount to subvert the creation of trust because that will create misalignment, misery, and meager earnings

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To all my U.S. readers, Happy Thanksgiving. We'll talk to you on Black Friday!

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