A study conducted in the US High-Tech industry by AMR (Advanced Market Research) revealed that:
- 80% of companies consider execution as their weak point in price and revenue management,
- 45% think they are not efficient at enforcing their own pricing policy,
- 50% mainly rely on manual or Excel-based processes.
Pricing execution: a set of still rather informal activities, poorly equipped and processed.
What does pricing execution cover? The fulfillment of a series of actions, by the sales reps and other functions (marketing, finance in particular), such as:
- Price negotiation (sales reps),
- Management of discounting rules and rebates
- Contract negotiation and execution follow-up,
- Periodic price adjustments and increases,
- Compliance with policy and rules (incoterms, minimum prices, monetization of services and special order conditions, etc.).
Often, a quick review shows that sales people have no real price guidelines except the price-list, or no system enables to track the cascading of price discounts or rebates and even little control is carried out on price integrity, to take some examples.
Operational bricks to improve and simplify the working life of sales people
There are many areas to work on; they must be taken as a whole starting from the reality of sales situations.
- Narrow price corridors for each transaction, delivered by pricing software connected to the CRM,
- Practices and arguments enabling winning sales and price conversations,
- A set discounts and rebates plus application rules,
- Action enablement: alerts on price adjustment needs for recurrent business, on contraction execution levels, on net prices and actual customer profitability,
- Productivity tools on key activities such as the product configuration or quote management.
- And, above all, actions to fight the received ideas and certainties and of the salesmen, as well as strengthen their sales behaviors. Because confidence and ability to discuss price appear to be a major point of progress for B2B sales forces.
Pricing dashboards and BI tools fall short for an efficient execution
Let’s state it clear: sales people are not analysts. They can’t spend 2 to 4 hours per week tin detailed analysis of price issues across their portfolio, especially when they sell thousands of products to 150 to 250 customers.
When your sales force exceeds 100 salespeople in charge of thousands of customers and tens of thousands of products or services, excel and BI tools won’t make the job.
A specialized software is necessary to provide each sales rep with the right price recommendations at the right time and on the right application or device.
Success is not based solely on discipline (in the sense of compliance with instructions): the price in B2B is very often determined during conversations between real persons (not robots yet), each party pursuing multiple objectives. Pay close attention to the content and the course of these conversations and to the underlying emotional and psychological drivers.
In B2B, the salesman is your key person, the one the company has commissioned and who makes “the last mile of pricing”. Give him the means to perform it right.