You’ve probably heard (or even said) it: Selling is an art, but the best salespeople also understand the science of what drives a customer to buy.
The same principle holds true for managing and motivating a profitable sales team. Identifying the best deals – those that deliver not just volume but the best margin – requires granular access to corporate, competitive, and market data. This data enables you to make the best decisions and actions for leading a profitable sales team.
Here are 7 ways data can help you achieve that:
1. Gain clarity on price variations
Price differences can occur between accounts as well as within an account. While things like geography and time of year can impact the final price a customer pays, price variance also occurs between sales representatives due to excessive discounting or a customer who didn’t fulfill their original purchase commitment.
Clear insight into sales and profitability data, including variables such as salesperson performance, compensation structure and product margin, enables you to proactively manage price variations to preserve and improve margins.
2. Leverage the Price Waterfall
The Price Waterfall offers a graphic illustration of how a product’s base price cascades through a series of pricing events to arrive at the price a customer ultimately pays. Actively managing the Price Waterfall enables you and your sales team to drill down and visually understand the dynamics of each deal and how discounts, transfer pricing, freight, support, and other variables can turn a superficially profitable deal into one that is marginally profitable at best.
3. Provide clear, defensible pricing guidelines
No one wants to enter a sales negotiation blindly. Empowering each sales representative with both a target price and a price floor prior to each sales meeting enables them to negotiate the most profitable deal. Studies show that providing this information up front can significantly improve the overall performance of a sales force, while maintaining customer relationships.
4. Extend pricing guidelines to include “hidden” costs
The more pricing insight your sales team has, the more effectively they can negotiate the most profitable deal. Offer pricing guidance on “hidden” costs that can negatively impact pocket margin, such as freight, customer support, and packaging to fully empower your sales representatives.
5. Arm your sales team with clear approval procedures
It’s vitally important that for each negotiation, a salesperson knows the target price, a fair price that typically requires minimal approval; the “approvable” price, which needs to have sign-off from a more senior level; and the “walk away” price, the point at which no further negotiation makes sense.
Studies have shown that many deals tend to cluster around the “easy to approve” transactions – the ones that allow salespeople to get the contract signed and move on, which could be leaving money on the table. Providing your sales team with approval procedures that are immediately and constantly available, in an actionable format, enables them to leave this comfort zone during negotiations and propose solutions that improve profitability.
6. Provide clarity on the reasoning behind the pricing
It’s human nature that when someone understands the “why” behind guidelines, they are more likely to follow them. Price Waterfalls, target and floor pricing, and approval procedures contain complex and granular information, but don’t create a “black box” that is impenetrable to your sales team.
Nothing creates suspicion more than critical numbers and guidance delivered without explanation. Sharing the logic behind these decisions with your sales team and demonstrating how, ultimately, they will result in better outcomes goes a long way in motivating them.
7. Monitor, review, maintain and improve
Sales teams shouldn’t operate in a vacuum. By leveraging data, sales history and actual input from salespeople, you are creating a living, self-improving ecosystem loaded with facts, analysis and field-proven strategies that lead to profitable transactions. Continue refining and reinforcing this roadmap and motivating your sales team to create and close profitable deals.
Want to learn more?
Contact Vendavo to learn how our intelligent pricing solutions can help your organization leverage data to build and win the best deals.