October 25th 2010
When does the customer first ask about price? Pricing part 2.
From our recent survey on pricing we found that 60% of customers raised price during the lead generation phase. Only 18% of sellers were able to position value so that the price issue was not raised until the closing/negotiation stage. Even though 70% of the companies do not post prices on their website, they are expecting that when the sales people engage with the client that they would be able to frame price and value.
I wish this were so. Hope is not an strategy. We see that price is raised early most often due to a misalignment of the marketing and sales stories plus a lack of sales tools for communicating customer value. So price defaults to the early discussion. The company is letting the customer “deduce’ value and set a reference price. This can be a rapid road to commoditization of your products (much beloved of corporate purchasing departments) and a slide in the margin for your products. I believe most companies are guilty of leaving a lot of money on the table by selling their product for too little.
It does not have to be so. In the above survey, 18% of the companies were able to control the discussion longer, so that the sales group would have more opportunity to extract and show the customer the business value of the product. In our practice, we are able to quickly grow sales force and marketing expertise in these areas. We do it through providing more compelling value messages for all the different organizational buyers plus providing tools and tactics to help the sales group pull these buyers through the sale, to preserve the value of your products. Its just that simple.
- Practical Pricing. Translating pricing theory into sustainable profit improvement. Michael Calogridis. (regnordman.com)
- The Real Growth Driver: Blending Commoditization and Differentiation (leveragepoint.com)
- A Pair of Killer Pricing Articles for Startups (enterpriseirregulars.com)
- Five Pricing Tips For Small Companies (blogs.forbes.com)
- The Competitive Edge: Differentiating Your Product or Service (pamil-visions.net)
- Why Customers and Suppliers Collide: Part 2 – The 4 Phases of the Buying Cycle (customerthink.com)
- Is price raised at the beginning of your sales process? Pricing panel Part 6.
- Sales’ response to a price rise. Pricing part 9.
- What generates the highest profit margin, product or service? Pricing part 3
- So what can a CEO, Marketer, Salesperson, or CFO do to improve your pricing? Pricing part 11
- Customer history, is it helpful in raising prices? Pricing part 5.