Pavlov’s Dogs

In the early 1900’s, Ivan Pavlov first demonstrated his theory of conditioned response.  During these tests, Pavlov showed that if you rang a bell (or tapped a tuning fork) each time you fed a dog, the animals would reach a point where they would salivate at the mere sound of the bell, even in the absence of food.

In sales, we’ve created our own conditioned response with our customer base….through the repetitive promotion of quarter and year end “deals”.  In short, we’ve trained our customers to expect to get a better price in December than they will in January.  Personally, I hate the year/quarter end deal, because we tend to sacrifice long term profitability and price protection for the sake of a single transaction today.

But if you feel you must offer your customer(s) some sort of time-sensitive pricing, here are some things to consider:

  • Verify that the customer can take action before you extend the offer.  The worst thing you can do is show your customer a price that he or she can’t move forward with because of budget constraints or not enough runway to complete the deal.
  • Clearly indicate that the offer is time-sensitive. Make sure that your customer understands that there is a “drop-dead-date” on the special pricing you’ve put in front of him, and that the pricing will revert to the previous structure one day beyond the date you’ve set.
  • Set the customer’s drop-dead-date comfortably short of your own. Always give yourself a few days cushion to account for PO errors, vacation schedules, potential shipping issues, etc.
  • Get comfortable with the new bar you’re setting. Like it or not, the new pricing structure you’re establishing with this year-end-deal will become a precedent for pricing going forward.  You’re opening yourself up to this “deal” price becoming the “standard” price, and you need to make sure that you’re OK with that over the long term.
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One Response to “Pavlov’s Dogs”

  1. Paul DeMore Says:

    Matt

    This is such a good article and I agree 100 percent with your comments. Especially the point around setting the new bar!

    Great timing going into qtr end.

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