The corporate pricing function has reached a turning point. A potent cocktail of technology, market volatility, and far savvier buyers is turning the pricing practice upside down. Companies that ignore the shifting winds are potentially putting their growth goals and competitive advantage at risk.
Below are five key B2B pricing trends that pricing teams cannot afford to miss:
- Growing Accessibility of Pricing Technology Pricing software has become increasingly sophisticated, moving well past process automation to deliver prescriptive, data-driven insights. The flip side is that pricing software is also moving to a SaaS delivery model – becoming more affordable and easier to implement in the process. The implication here is that smaller-sized competitors that fairly recently were unlikely to have a dedicated pricing team can now take advantage of technology to help level the playing field. The size and tenure of your pricing team may no longer hold the same competitive advantage it once had.
- The Rise of Professional Procurement For many companies looking to cut costs, the last recession underscored the value of aggressive procurement – or discount extraction — teams. Because it continues to pay off, companies are aggressively expanding the scope of procurement to involve them as many transactions as possible. If you have a sales team that is still leading with price and not value, these newly powerful customer extraction experts will eat them alive. Pricing strategy and price optimization in the field are therefore more important than ever and your reps need the tools and training to compete against the procurement sharks.
- Significant Shifts in Buyer Behavior Sales teams used to be the primary messengers of company offerings. However, the Internet has slowly but surely changed the paradigm. Buyers are now conducting primary research themselves and only interacting with sales reps after they have narrowed their evaluation criteria. The result is your marketing department, along with ever-popular peer review platforms, is now the primary conduit in delivering differential value to early stage evaluators. The implication is that pricing teams need to work closely with marketing and not just sales.
- Retention and Expansion Customer acquisition has become harder and more expensive. B2B sales teams are now recognizing the importance of customer retention and account expansion. This means pricing decisions will increasingly need to take account of customer lifetime value and not just the transaction at hand. There is also an opportunity for pricing teams to leverage data and analytics to reduce customer churn and identify cross-sell opportunities customers.
- Market Volatility Significant fluctuations in input costs, supply chain uncertainty, unpredictable regulatory environments, political and economic upheaval, disruptive technology. If you are a global business, you will likely be confronted by at least one of these challenges. Volatility has become the new normal and pricing teams need to get ahead of it. This includes improving how they monitor performance and anticipate market changes. They also need to take swift action when changes are identified. It is no longer acceptable to track pricing performance annually or even quarterly; they need to be thinking in monthly, weekly, or even daily terms and have the tools in place to accomplish this.
Want to learn more? Join PricingBrew’s Rafe VanDenBerg and PROS on June 22 for a B2B pricing trends webinar that will cover these trends in more detail and offer practical insights on how to address them.