Why is Pricing Strategy the Sales Training Gap that Leaders Ignore?

In 2011, we surveyed and interviewed over 12,000 sales people about sales training. When we asked what area of the sales process reps wanted help with, 4 out of 5 answered “Pricing/Justifying Costs/ROI for our product/service”.  Sales people are uncomfortable having the pricing discussion. And leadership is letting them down by not developing their skills.

The impact on the sales force is stalled deals. Sales cycles get extended. Reps pester customers. Managers pester reps. VPs of Sales pester Managers. Everybody is staring at the forecast keeping score. The best sales leaders have changed the game with pricing by involving the key stakeholders (internal and external) early in the sales process. The best leaders use the following 3 steps to solve the Sales Training Gap in Pricing.

#1 - Exit Criteria—does your sales process have exit criteria? Exit Criteria is observable customer behavior that signals the buyer has progressed to the next stage..

Why does this matter—Sales people throw price out too early. Most times customers ask for a number because they have been conditioned to do so by other bad sales people. Unless a customer has clearly articulated all of their problem solving options and ranked them, you cannot discuss price. Why? Because you will have no ability to put a thoughtful proposal together that is focused on what matters to The Customer.

#2 - Collaboration—does your sales process have a step for collaboration with the customer on pricing?

Why does this matter—Budget—is this a replacement spend or new spend? If new, where will the money come from? They will have to create budget and it is your job to show them a believable revenue lift (longer term) or a tangible cost savings (short term). If your solution does not grow revenue or reduce cost In the Eyes of the Customer, you are done. If they don’t have some overwhelming compelling event that is creating urgency for you, the lack of value is the reason for the stall. That is a fact.

#3 - Internal Approvals—does your sales process have a fluid, easy process to get pricing for a customer?

Why does this matter—We see too many companies where non customer facing stakeholders (finance, procurement, legal) are making customer facing decisions without any customer facing knowledge. If this is happening don’t blame them. Blame sales leadership. It is the job of the sales leaders to ensure back office process is smooth and there is trust. Take these people out on some sales calls. Expose them to what it means to get a customer. Show them your customer acquisition cost.

Call To Action -

Make the investment in the 3 stakeholders. Your ability to help your reps, your customers and your company understand pricing is a valuable exercise. The talent management activities above can generate a nice Q1 ROI in a short period of time. If you are looking for ways to execute this flawlessly call my friend John Deris SVP of National Accounts at Ryder or my friend Rick Cibos, Group Director of National Accounts at Ryder. These guys are two of the best.

What tactics have you deployed to manage the pricing discussion internally and externally?

Source: Sales Force Effectiveness Blog on Linkedin (Posted by Matt Sharrers on Fri, Jan 20, 2012)


EPP is pleased to announce a new partnership with Simon-Kucher & Partners

The European Pricing Platform (EPP) is proud to announce that they have added Simon-Kucher & Partners, a global consulting firm specializing in pricing and marketing strategy, to their partners. Simon-Kucher & Partners’ experience builds on over 2000 projects conducted by their pricing experts in the last three years alone. Simon-Kucher will become a new Pricing Expert Partner, exhibitor, and sponsor of upcoming EPP events throughout Europe. Simon-Kucher will offer EPP participants insights, benchmarks, proven tools and methodologies to illustrate how to maximize profitability through cutting-edge marketing and pricing strategies.

“The Global Pricing Study that surveyed more than 3,900 high-level decision makers from all major service and manufacturing industries about their profit culture indicated that 65 percent of companies are not able to charge the prices they deserve for the value their products and services deliver. As a result, they lose 25 percent of profits. Rather than focusing on profit, 46 percent of the companies fight price wars to gain volume and market share. And when companies finally bring themselves to raise prices, they only get half of what they planned,” explains Danilo Zatta, Partner at Simon-Kucher & Partner. “Partnering with EPP puts us in a position to address existing pricing practices even better and to show how the challenges identified in the Global Pricing Study 2011 can be solved.”

Simon-Kucher & Partners supports and partners with clients in the elusive and yet attainable hunt for sustainable business growth through profit margin improvement. A comprehensive and well-executed marketing and pricing strategy can result in critical profit gains and, ultimately, business survival during difficult times. With 23 offices in 17 countries and over 570 professionals, the company has been defined as the world’s leading pricing consultancy by both BusinessWeek and The Economist. Simon-Kucher & Partners has served more than 100 of the Global Fortune 500 companies. Clients come from all major industries and are often leaders in their markets.

“Simon-Kucher has been carefully selected to join our group of pricing experts worldwide because of their proven track record, experience, and pricing science methodologies,” says Pol Vanaerde, EPP president. “We are pleased to have Simon-Kucher & Partners included on our expert list and look forward to working closely with them to better serve our participants.”

EPP serves as the first ‘not-for-profit’ network for cross-industrial pricing and profit optimization decision makers in Europe. Through various on and offline media, EPP is dedicated to developing and sharing pricing best practices, effective tools, methodologies and technological solutions that help to successfully define and implement strategic pricing. Through various on- and offline media, EPP is dedicated to develop and share pricing best practices, effective tools, methodologies and populate technological solutions assisting in successful definition and implementation of Strategic Pricing.

About Simon-Kucher & Partners Strategy & Marketing Consultants
Simon-Kucher & Partners is a global consulting firm specializing in strategy, marketing, pricing and sales. Founded in 1985, the company focuses on Smart Profit GrowthSM by helping clients to boost their top line instead of cutting costs. With over 570 professionals in 23 offices worldwide, the practice is built on evidence-based, practical strategies for profit improvement. Simon-Kucher & Partners is regarded as the world's leading pricing advisor and thought leader.

About European Pricing Platform
The EPP offers your company to have the right pricing tactics in place to guarantee customer loyalty and deliver sustained margin growth to your business. Enhance your pricing know-how and be successful in it by joining this dynamic and yet resourceful pricing platform.The EPP helps your company find the right pricing tactics to guarantee customer loyalty and generate sustainable margin growth for your business. Enhance your pricing know-how and be successful in it by joining this dynamic and resourceful pricing platform.