As the economy opens back up, inflation is rising – even faster than initially predicted. Many companies are looking backward and implementing the same strategies for cost reduction instead of adapting to the increased volatility of the post-pandemic economy.
But they’re going to quickly find themselves falling behind. There’s a better, faster way to improve overall profitability that’s often overlooked: pricing powered by intelligence.
The companies that will pull ahead of the rest are already implementing best-in-class pricing processes, tools, and skillsets to enhance sales cycle effectiveness and protect their bottom line – despite rising inflation.
Now is the time to arm your sales team with intelligent pricing, so they can maintain healthy and more profitable business relationships.
Invest in Pricing Discipline
In any negotiation, price is always one of the first objections to come up. It’s inevitable. If you invest in pricing discipline and give your sales team the insights and tools they need to utilize it, they’ll have what they need to both negotiate a discount and challenge it.
Pricing discipline is often overlooked, and more focus is put on cost control and other areas, even though intelligent pricing is key to protecting your business, sustaining profitable growth, and making selling easier.
Pricing opportunities will vary in different local market environments, and it’s crucial to understand those distinct markets if you want to establish the most profitable pricing strategy. Price your products and services optimally based on careful analysis and observation – and in a way that will continue to be sustainable.
Establish Situational Pricing Awareness and Adapt Accordingly
Pricing is more transparent now than it ever has been before, which presents a great opportunity for sales teams.
Sellers should be using competitive pricing data to negotiate openly about pricing. Having access to the benchmark information that your customers typically use against you can actually improve your competitiveness. Take advantage of it to provide predefined, agreed-upon value for the customer and improve profitability.
Having access to the benchmark information that your customers typically use against you can actually improve your competitiveness
Focus Pricing on Careful Analysis, Policy Enforcement, and Preparation
Quick pricing and profitability analysis give your sales team a clear understanding of current and potential margin leaks – and opportunities – so they can develop a plan to address them.
Business insights are easily available, but too often they are not properly communicated to the sales team. If a sales executive can provide details like frame of reference, last price paid, win/loss, and competitor information, they’re much better positioned to defend pricing recommendations.
Having that data in their pocket gives the sales person more credibility in price negotiations, as well as accountability in adhering to pricing guidance. Ensure they have access to that information and establish metrics for price adoption – and compensate your sales teams based on adherence and margin lift.
Become a Master in Pricing Execution
Most companies spend too much time and energy debating pricing strategy and internal alignment when they should be focusing on pricing execution and measuring price realization.
The best pricing execution frameworks should include advanced analytics and technology designed specifically for pricing initiatives.
The best pricing execution frameworks should include advanced analytics and technology designed specifically for pricing initiatives. There are different ways you can evaluate and establish pricing based on the exchange of value. But at the end of the day, every customer is unique and will value your products and services differently.
For more accurate insights into those different variables, you’ll need proper segmentation. Proper segmentation captures customer behavior in detail and provides a dynamic execution framework to adjust accordingly.
Maximize the Value of Pricing Initiatives
Even with all the right processes in place, many organizations find it difficult to quantify the impact of their pricing initiatives. Increasing pricing discipline is an ongoing effort, and you need to consistently analyze and adapt your strategy. Set clearly-defined metrics and procedures to monitor how much value is being delivered by different pricing initiatives.
You need to combine accurate customer and product segmentation, dynamic execution, and insights for selling context to realize greater value with your pricing strategy. There are many factors affecting the value that companies ultimately create, so pricing optimization should be a cross-functional team effort. All units – including product management, marketing, finance, sales, pricing, and operations – should be involved in company pricing initiatives.