April 30, 2012
Following the news reports on CNN this week of the Hero on the New York City Subways, Snack Man, I thought back to my days as a kid in New York City. During the 1980’s riding the New York City subways safely meant more than being armed with a bag of chips. It meant knowing about respect. It meant not looking at the wrong person in the wrong way at the wrong time.
As I work with our customers at Vendavo, I find that of our most successful customers Price with Respect and they do this in 3 ways, they:
- Respect their Products
- Respect their Sales Representatives
- Respect their Customers
So how do they do this?
First, respect your Products. Respecting your products means you understand where your products have unique value in the market place and where they don’t.Respect the time your engineers, manufacturing and product management have put into making the product and don’t discount it away at first request. In order to do this our customers implement value based pricing, educate their sales reps continuously and implement stricter discounting policies for products with unique pricing power.
Second, respect your Sales Representatives. As a pricing professional, don’t ask your sales team to do anything that you would not be willing to do yourself. Just as you might have to defend yourself on a NYC subway one day, your sales teams are asked to defend your prices every day. Don’t arm them with a bag of chips, arm them with something more powerful. Again our best customers provide information, guidance and easy to use analysis for their teams to justify price increases. One of our favorite Pricing Directors, writes newsletters on Raw Material Cost increases and flies around the country defending price.
Lastly, respect your Customers. The unique thing about B2B pricing we find is the value of emotions in selling and the risk associated with it. While everyone preaches win-win, we constantly walk the thin line in B2B pricing.There is nothing worse than having to face the procurement manager at your largest customer who is just realizing he/she was burned on the last 2 negotiations. We find our best customers don’t use pricing software and initiatives to trick their customers. They use pricing programs to better inform, analyze and recommend what the price should be to their customers, representatives and product management. At the end of the day, you must be able to defend your price.
As my mom used to say, “that and a token gets you on the subway”, I now like to say “Pricing with a little respect gets you a little extra margin”.
– Tom Cowen