In part 1 of this article, we started looking at nine myths about pricing guidance, and how to help your sales team overcome resistance to these tools in order to unlock new sales productivity and profitability.
We pick up part 2 with the fifth myth:
Myth No. 5: Having a pricing policy and pricing excellence is the same thing. In reality, having a policy does not mean pricing excellence is taking place in your sales organization. Setting a policy has nothing to do with the final pocket price.
What’s important to achieve pricing excellence is to ensure discipline around pricing policy. That’s where tools really help, by providing support for discount discipline.
Myth No. 6: It’s either market share or profitability. In today’s world, you need both, and it’s possible to accomplish both simultaneously by using data-driven pricing guidance. The key is to target the “zone of indifference.”
Every customer has a zone in which small price increases don’t affect their buying behavior or satisfaction, and that point is key to maximizing profits. Reps need data-driven pricing guidance to identify this zone and adjust prices to capture the maximum willingness to pay. Identifying that point also shows you where there are opportunities to win more business.
Myth No. 7: Pricing guidance means more oversight and reduced responsiveness to customers. Salespeople are always concerned about analysts looking over their shoulder; they think this pricing guidance is going to reduce their ability to do what they believe is most important to win the business. The reality is that pricing guidance results in less oversight and greater responsiveness.
With pricing guidance integrated into a configure, price, quote (CPQ) solution, you’re able to automate the approval workflow by using business rules. This automated approval process requires less oversight for most deals, and actually accelerates a sales rep’s ability to be responsive to customers.
Myth No. 8: Pricing guidance is unrealistic and not connected to market realities. Salespeople often treat pricing guidance with suspicion, seeing it as just algorithmic guesswork that holds little value. The truth is that pricing guidance is only effective when it’s based on accurate information and data science.
The goal with pricing guidance is to get away from the subjectivity and unrealistic expectations that come from following gut instinct, and replace them with proven techniques based on your actual transaction history.
Myth No. 9: Salespeople don’t want to achieve pricing excellence. Dispelling this last myth is especially important for leadership and for marketing people. Salespeople have proven repeatedly that they use information effectively. When they’re given accurate and helpful information on pricing, profit, inventory and willingness to pay, they use it to arrive at approved margins.
These nine myths show why it’s so important to take the time to educate your sales reps on how pricing works and the impact it has on their success. They need to see how combining pricing guidance and CPQ tools offer real advantages that are relevant to them.
Make sure you show reps the specific opportunities made available by pricing guidance and the impact these tools could have on their sales goals and compensation. Also, demonstrate that these solutions are compatible with the speed of business — they’re not going to take a lot of extra time and administrative work.
Finally, try to help reps achieve a quick win by using CPQ and pricing guidance. A quick win really helps to bring home the idea that this approach works, helping reps to internalize the advantages and dispel the myths around pricing guidance.