by Art Waskey | Jul 17, 2023 | Art of Sales Weekly, Featured
As customers, we look for vendors who provide stable and fair pricing. As sales reps, we know that pricing products consistently creates better customer retention. Certainly, today’s economic disruptors, like inflation, cause us to struggle to keep costs from rising and prices down. They can create price inconsistency. Making pricing a core competency of your business, therefore, is critical to success in a challenging business environment.
Data-driven Pricing
It is important to the effectiveness of your pricing strategy to use digital analysis tools. According to White Cup Solutions, a company that offers a Revenue Intelligence platform designed for the distribution industry, “Distributors who win won’t have one-size-fits-all pricing; they’ll have data-driven intelligent pricing practices to offer the right price to the right customer at the right time. Furthermore, knowledge is pricing power; they’ll put in place the ability to run what-if scenarios to predict market share, revenues, and margins at various price points.”
Be Proactive
Today’s business environment is punctuated by economic disruptors. Luckily, technology enables us to respond to these disruptors quickly and efficiently. Also, make sure your analytic tools are proactive and agile — not reactive and clumsy. Meanwhile, identify your greatest pricing opportunities and set strategic price targets by product and customer type. Then, ensure that your customer’s performance matches your pricing model. Integrate digital data-based pricing metrics to minimize inconsistencies created by the emotional side of your planning process. Be prepared for economic disruption with a strategic pricing plan that is built with digital tools.
Develop your core
Make pricing a core competency by soliciting cross-functional pricing communication support throughout your organization. Get rid of inefficient customer-specific pricing. Additionally, use digital analysis tools to respond to economic disruptors as they occur.
In conclusion, by making pricing a core competency and by using digital tools, you can build consistency in your business and enjoy higher rates of customer retention.
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by Art Waskey | Jul 10, 2023 | Art of Sales Weekly, Featured
There is no stopping the impact of economic disruptors on your business. Consequently, supply chains may become tangled, inflation can flare up, and pandemics may emerge. Furthermore, these events, which are mostly beyond your control, significantly impact your pricing. In today’s environment, spreadsheet analysis can’t keep up with the pace of change. Alternatively, your pricing solutions need to be able to address disruptive trends quickly and efficiently.
Solutions
Furthermore, with the current rate of price change, margin erosion is a significant concern for many distributors, even as they make price adjustments. Therefore, how can a distributor stay on top of the pricing of thousands of SKUs in the face of economic disruption?
Here are three important suggestions.
- Build company culture and team support – To ensure pricing is a team effort, your CEO must solicit cross-functional pricing communication support throughout the organization. As a company, you must recognize where you are going and develop a pricing strategy accordingly. This process must involve many people to ensure a collective buy-in. To make the process more collaborative, all players should contribute to setting pricing, structuring contracts, and determining customer-specific pricing (CSP).
- Communicate — Set Key Performance Indicator (KPI) benchmarks and communicate results every month throughout your organization. Share the company’s vision of growth with all team members, and alternatively, managers should personally connect with the sales team and branch stores for feedback. Celebrate exceptional performance and offer coaching on various aspects, including the current pricing status, changes in pricing strategy, adoption rates, and optimized profit results.
- Integrate data-based pricing – Use digital analytics to minimize inefficient and time-consuming CSP. Undoubtedly, the backbone of your pricing should be a Pricing Profit Optimizer that sets the lowest and highest acceptable margins. Moreover, put pricing back in the proper zone for the customer and the market so sales reps don’t need to use overrides. Ensure your sales team knows management is in contact with customer needs. Get CSP under control.
Be Prepared
In conclusion, economic disruptors are part and parcel of today’s business environment. Be prepared to offset any negative impacts with smart pricing solutions that are responsive to rapid or sudden changes.
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by Art Waskey | Jun 26, 2023 | Art of Sales Weekly, Featured
With digitization has come rapid change in how we view and analyze pricing decisions. It is no longer viable to price on a set-it and forget-it basis. The many factors impacting pricing can now be analyzed with data-driven programs. Today, data is critical to your pricing strategy.
Factors to Consider
Here are a few factors to consider when setting your pricing strategy.
Consistency — Is your pricing consistent across platforms? Do your customers get different pricing from the Outside Sales Rep (OSR), Inside Sales Rep (ISR), eCommerce orders, Customer Service Rep (CSR), and/or counter store reps? Do your salespeople know how the pricing works?
As senior vice president of sales, I would field calls from OSRs. They voiced their dissatisfaction regarding the inconsistency in charging customers the quoted price during store pick-up. Furthermore, the issue extended to products that were substituted for the originally quoted ones.. If your pricing is inconsistent, less scrupulous customers can play one employee against the other, costing you money.
Pricing overrides – Human nature comes into play in pricing consistency. Whether retail or wholesale, we tend to migrate to the contact we think will give us the best price. When the client states they are a large user, do your reps override pricing guidelines and offer inappropriate discounts?
Customer contracts – Are your customers using their contract pricing effectively? Is the pricing in a viable metric? Given the complexity of today’s marketplace, OSRs are no longer in a position to set good customer-specific pricing (CSP).
It is no longer realistic to “set it and forget it.” The “discounting from list” strategy isn’t reactive in today’s dynamic digital marketplace. Hard-loaded fixed pricing policies should no longer be used. Given the environment of the last couple of years, fixed pricing can rapidly lead to instant margin erosion.
If 60% of your revenue is set by CSP, analyze where your sales dollars are coming from to ensure the correct margin. Know your renewal dates. Find out where the product volume is flowing. Evaluate the price points, especially on the most expensive products, and manage your customer contracts.
A Dynamic Pricing Strategy
Remember, technology has changed the dynamics of pricing strategy. When calculating price outcomes use digital tools to be able to consider the many factors, like price inconsistency, that impact your bottom line.
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by Art Waskey | Jun 19, 2023 | Art of Sales Weekly, Featured
Technology has changed the dynamics of pricing strategy. With digitalization, information is now readily available to measure customer performance. Additionally, analyzing price increases is now a data-driven process.
Calculating Outcomes
Consider these elements when calculating pricing outcomes.
Customer segmentation – Make sure your customer segmentation is based on data, not personal emotions. Considerations for segmentation should focus on revenue and gross margin. Pricing shouldn’t be influenced by the emotions of an outside sales rep (OSR), inside sales rep (ISR), store manager, or customer service personnel. Moreover, the top revenue generator for one OSR’s territory may not be one of the company’s top 20 customers. Consider grouping your customers into four categories — A through D — with A being your top performer with the best pricing. Check to make sure your customers are in the correct pricing category based on revenue and gross margin.
Cost of service — Sales revenue and gross profit percentage are not the only considerations. You also need to look at the cost of service. Review how promptly the customer pays their bill. Is the customer that is past due 60 days priced accordingly? How many returns are you processing for the customer each year? Does a specific customer require ongoing training, technical service, or an inordinate amount of other types of interaction? However, these are all costs to your bottom line. They should be quantified and considered in price adjustments.
Customer type and geographic location — Customer type and location affects pricing. Examine how customers use your products and how that affects what you can charge. Use these and other types of considerations in your pricing structure. For example, the greater the distance from a major market, the greater the distribution cost. Pricing should correspond to this. Customers with multiple locations in different markets also need special pricing considerations. Use digital analytics in your pricing evaluation process.
Let Data Drive Pricing Decisions
Lastly, information on customer segmentation, cost of service, and customer type and location all reside in your software systems. Use that data to drive your pricing decisions and create a sales strategy that is responsive to today’s market dynamics.
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by Art Waskey | Jun 13, 2023 | Art of Sales Weekly, Featured
Trusted Advisors
We are all aware of how challenging the rapid pace of sales is in today’s digitized market. Also, changing customer expectations require adopting new approaches to sales that merge traditional relationship selling techniques with digital eCommerce solutions. Sales strategies like Enterprise Selling encourage the salesperson to become an expert in each customer’s needs.
By leveraging digital product information accessibility, sales representatives gain the ability to identify issues that may go unnoticed by the clients themselves. This enables them to become trusted advisors by deepening their product knowledge and comprehending customer needs. Consequently, they deliver a heightened level of expertise, facilitating more efficient customer journeys toward desired outcomes.
Time is Currency
Customer expectations have undergone a significant change, with a strong emphasis on an improved customer experience. This shift is fueled by the need for instant transactions online. Time has now become a valuable currency. Additionally, to make the most of your time and successfully close deals, leverage technology to bridge the knowledge gap. Sales representatives must excel in digital selection, organization, and professional presentation. Explore automation options to streamline the process and save time. By doing so, you elevate your expertise and deliver a higher level of service.
The Right Technology Partners
When selecting your technology platforms, establish clear goals and ensure that your consultants can meet those expectations. Utilize similar distributorships as sounding boards to gather recommendations for proven technology partners. Additionally, examine the outcomes of early technology adopters and learn from their experiences. Implement necessary changes and leverage the right technology partners to facilitate user acceptance of newly introduced processes that your associates may initially hesitate to adopt.
Reach For The top
In conclusion, addressing new customer demands with the right technology allows you to provide a high level of expertise. By reaching for the top you can get customers to endpoints more efficiently.
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by Art Waskey | May 30, 2023 | Art of Sales Weekly, Featured
Digitization
Digitization is the name of the game in today’s fast-paced world of sales. Technology options can seem overwhelming but to be competitive you have to continually up your digital IQ.
Four Recommendations
Here are four recommendations to help you achieve the highest level of tech expertise.
- Don’t be afraid to start. New technology can be overwhelming but you need to dive in. When the company I was with built its first high-pressure cylinder control system (a system for verifying cylinders at customer locations), it failed miserably. Our president complained about the time and energy wasted but I saw it as a valuable learning experience. Thirty years later that company has a cylinder control system faster than most of its competitors and developed for less money.
- Focus on the most needed areas. Your technology IQ focus should be on those areas that promise the greatest return on your investment. Some companies start on the backend — inventory, and accounting — with an ERP system. Others start with their CRM. The distributor I was with started with a CRM 30 years ago because it was available at an affordable cost. The company moved on from the original provider after a few years to a CRM that had a better understanding of its industry.
- Establish your KPIs. You need to identify what kind and level of information drives your business and establish your KPIs accordingly. For some parts of the business, you may need to outsource your data analytics. This can be done without spending large sums. In other cases, you will want the analytics generated in-house. Hire IT techs as needed and check progress against your KPIs.
- Prioritize. In a world full of technology options you need to be able to prioritize. Look for what is most important for your company to digitize. Spend time and set aside a budget for some experimentation so you can find the systems that will transform your business most effectively.
Stay Competitive
Remaining competitive in today’s market requires a high technology IQ. Don’t be afraid to start, focus on technology that promises the greatest ROI, and establish KPIs that address your digital goals.
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