Developing a Discount Approach: From Strategy to Implementation

How did implementation enable a software company to boost profit and inspire its sales force?

Coming out of an economic downturn, a software company was growing at a rate of 10% a year. However, the number and frequency of discounts remained high. In fact, sales teams were offering a broad range of discounts for similar products and customer types. Although several ideas about how to structure discounts emerged, the company needed an expert in implementation to make the shift from strategy to reality.

Together, we analyzed price points and discounts across the entire portfolio, while conducting in-depth interviews and surveys with customers to identify opportunities for greater value capture.

Pricing decisions were then evaluated through three key lenses

  • Pricing strategy versus overall business strategy
  • Pricing strategy within the competitive landscape
  • Opportunities to increase profitability

This collaborative process inspired the client to consider how discounting affected not only their pricing strategy, but their entire business.

BCG brought ideas, practices, and suggestions about how we could look at our business in ways that we were not thinking about. —Client VP

Several theories came out of this evaluation, resulting in rigorous development and testing of multiple tools to increase visibility and consistency. Ultimately, the most successful tool was built into the client’s CRM system, ensuring that the discounting strategy was applied across the entire organization.

The implementation of custom solutions made a tremendous impact on the company. The sales teams were able to make better discounting decisions by seeing what price points to aim for based on industry and deal size. It also let them see how profitable each deal would be based on the discount.

It wasn’t just about telling us how we could improve. BCG helped us create the tools that will ensure success in terms of rolling out this program to our organization. —Client Manager

As a result, the software company realized an increase of 3.5 points in revenue. It also launched an internal culture shift that changed how sales people were paid, what the company charged for maintenance, and the number and types of services the company offered.

Success in pricing depends on advancing strategies to the next level—implementation. For the software company, it meant working together with a partner to create new solutions that drive transformative change and long-term value.

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