Have you ever encountered the situation where your sales team offers a discount to close a deal, believing that this will increase the conversion rate? Although it is a common practice, the reality can be very different. Let’s explore how discounts affect revenue and the importance of effective prospecting and lead qualification strategies.

Basic Scenario

Let’s consider a scenario where your company has 500 leads per month. Of these, you convert 8 into Sales Accepted Leads (SALs), which are qualified opportunities. Assuming your product price is R$20,000 and your win rate is 20%, the result would be:

• Opportunities Generated (SALs): 8

• Win Rate: 20% (1.6 sales)

• Annual Recurring Revenue (ARR): 1.6 × R$20,000 = R$32,000

This is the basic scenario that many companies face.

The Impact of Discounts

Now, let’s see how discounts can impact revenue. The table below shows revenue based on the discount applied:

A 5% discount already reduces revenue by 5%, and a 20% discount would reduce revenue to R$25,600, a loss of R$6,400.

Calculating the Final Losses

To understand the long-term impact, let’s calculate the loss over a year, assuming a 20% discount:

1. Monthly Sales Without Discount: R$32,000

2. Monthly Sales With 20% Discount: R$25,600

3. Monthly Loss: R$32,000 - R$25,600 = R$6,400

4. Annual Loss (12 months): R$6,400 × 12 = R$76,800

Therefore, a 20% discount could result in a loss of R$76,800 in a year, an amount that could be reinvested in marketing, sales, or operations.

The Need to Increase Sales

To maintain the revenue of R$32,000 even after the discount, it will be necessary to increase the number of sales. Let’s calculate:

• Desired Revenue: R$32,000

• Product Price: R$20,000

Required Sales Quantity without Discount = R$32,000 / R$20,000 = 1.6 sales

With the 20% discount, it would be necessary:

Sales Quantity with Discount = R$25,600 / R$20,000 = 1.28 sales

If your win rate remains at 20%, it will be necessary to increase the number of qualified leads to compensate for the loss of revenue.

Operating Costs

Now, consider the operating costs to increase sales:

• Pre-Sales Cost: R$3,000/month

• Salesperson Cost: R$5,000/month

• Marketing Cost: R$2,000/month

• Total Monthly Costs: R$10,000

To increase sales by 5%, it will be necessary to invest in more leads and qualification, but also to focus on the quality of these leads to ensure efficiency.

The Importance of Correct Prospecting

Effective prospecting is essential to ensure that you are attracting the right leads. Qualified leads that understand the value of your product are more likely to close without the need for discounts. Here are some ways to improve your sales without relying on discounts:

1. Improvement in Lead Quality: Working with leads that understand the value of the product increases your win rate.

2. Training and Education: Invest in training the sales team so they can communicate the value of the product clearly.

3. Reports and Analysis: Use data to analyze the best strategies and leads that are converting.

Conclusion

Understanding the relationship between discounts and conversion rates is essential for the financial health of your company. Instead of relying on discounts to close deals, focus on lead qualification and effective prospecting. This will not only help maintain your revenue but also build a more loyal and satisfied customer base.

By adopting a strategic approach, you will avoid the pitfalls of discounts and maximize your sales, ensuring that each generated lead has real conversion potential.