Discounting Versus Fixing the Sales Funnel
Vantage HR Cloud sells onboarding software to mid-sized employers. Last quarter the marketing team generated 1,200 inbound leads. Sales development marked 360 as marketing-qualified, account executives accepted 108 as sales-qualified, and 19 closed. The average deal is $9,000 per year, and the sales cycle is 90 days. Reps receive commission only at close and have begun offering a 15% first-year discount when a deal stalls. Win rates are highest among prospects who attended a demo with an HR director present, but only 28% of accepted opportunities include that role. The CEO wants a 25% increase in closed deals next quarter and has asked whether to expand the discount or change the funnel.
1. Calculate the stage conversion rates and identify the most important bottleneck. Does the data support expanding the 15% discount?
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Lead to MQL = 360 / 1,200 = 30%. MQL to SQL = 108 / 360 = 30%. SQL to close = 19 / 108 = 17.6%. Overall lead-to-close = 19 / 1,200 = 1.58%.
The largest absolute drop is 252 leads that never become MQL, but the same 30% conversion appears at the next stage. The clearest controllable loss is after sales accepts an opportunity: 89 of 108 do not close, and only 28% include an HR director in the demo even though those demos have higher win rates. That points to qualification and demo quality, not price.
A 15% discount costs $1,350 on a $9,000 deal. If all 24 deals needed for a 25% increase were discounted, annual revenue would fall by $32,400, and incremental gross profit would have to cover that. The data do not show that discounting fixes the stage where deals stall.
2. Recommend specific changes to qualification, sales process, and incentives, with metrics.
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Vantage should tighten the definition of a sales-ready opportunity: an HR director or equivalent decision-maker involved, a defined employee-count range, an active onboarding or compliance problem, and a realistic 90-day timeline. Sales development should not pass leads that only match industry but lack a named pain or role.
Account executives should require an HR director in the demo before a proposal or discount is approved. Reps need discovery scripts that quantify the cost of the current onboarding process and a controlled discount policy with manager approval. Because commission is paid only at close, the company should monitor discount rate by rep and consider a small quality or retention component so reps are not rewarded for buying revenue.
Metrics should include MQL-to-SQL, SQL-to-close, demo attendance by role, average discount, 90-day retention, and pipeline coverage. A 25% increase should be planned from these levers, not from a blanket discount.
3. How could Vantage test the recommended changes without putting the quarter at risk?
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Run a four-week pilot with half the sales development team and a defined lead segment. Keep the 15% discount available only by exception in both the pilot and control groups so price is not the only difference. Compare SQL acceptance, HR-director demo attendance, cycle time, close rate, and discount rate.
If the pilot shows more qualified demos and a higher close rate without deeper discounting, expand it. If close rates do not move, the problem may be product fit, demo quality, or follow-up cadence, and the company should examine lost-deal reasons before spending more margin. The quarter can be protected by maintaining the current lead flow for the control group and reviewing results weekly.