Our sales reps had authority to discount up to 25% without approval. Average discount across closed deals was 18.3%. We were leaving significant margin on the table, so we dropped discount authority to 10% and required VP approval above that.

Expected Outcomes

Finance projected we would protect 6-8% more margin while potentially seeing a small dip in close rate. Sales leadership warned about longer cycles and frustrated prospects. Both were partially right and partially wrong.

Actual Results After 90 Days

Close rates dropped from 23% to 19% initially, then recovered to 21% by day 90. Average deal size increased 11% because reps focused more on value articulation rather than price concessions. Average discount across closed deals dropped to 9.2%.

Sales cycle length increased by 8 days on average. But here is what surprised us: deals requiring VP approval for discounts above 10% actually closed at higher rates than those under 10%. When prospects pushed hard enough to trigger approval requirements, they were more serious buyers.

The unintended consequence was on deals between $15K and $30K. Reps started walking away from price-sensitive prospects earlier rather than working through objections. We lost deals we might have closed at lower margins but acceptable volume. Now we are testing differentiated discount authority based on deal size and customer segment to find the optimal balance.