Price With A New Perspective
This Guest Post was written by Patrick McCullough, Director with Holden Advisors, joins us to discuss the ways in which you can gain a deeper understanding of your customer’s business.
Don’t be fooled, procurement continues to win the B2B negotiation game being played with your commercial teams. Market statistics validate procurements’ success in driving prices lower each year for the same products and services. I know that you are thinking, “my team is different,” but, is your team really different? Consider the average discount rates across your company. Don’t you think the discounts should be smaller?
One of the primary actions that procurement uses to drive prices lower is to reverse the negotiation and turn your sales team’s focus inward.
It is helpful to think about each negotiation as two smaller negotiations – the first being the negotiation between the sales team and the customer, while the second is the internal negotiation between sales and the pricing team.
Using advanced tactics and gamesmanship, procurement has been taught to increase the pressure on sales and focus the sales team’s energy on negotiating with their own company.
Thus, the pricing organization receives both the internal and external pressure to close deals at the customer’s desired price.
Price with a New Perspective is a program that has been designed to change this paradigm. In learning unique ways to both identify and quantify value, pricing professionals can empower their sales team to defend their value.
When pricing and sales work together in unison, it levels the playing field created by professional buyers and procurement.
One of the first steps the pricing team can take to work more cooperatively with their sales team is to gain an in-depth understanding of their sales cycle. Unfortunately, pricing is typically brought into the process late in the sales cycle, which results in the internal negotiations previously mentioned.
If the pricing team can partner with sales and advocate for earlier involvement, together they can craft a value proposition and agree on an appropriate price to protect their value and win the negotiation.
Another step the pricing team can take is to better understand buyer types and how they behave in a negotiation.
When both pricing and sales understand buyer types and better yet, how they behave, they
naturally begin to act as a unified commercial team.
One example is the creation of customer specific price-value tradeoffs that can be used in a negotiation to remove high value-add components of an offering and lower the price.
We call these tradeoffs Give-GetsSM and they have proven to be an incredibly effective tool to uncover buyer tactics and determine what customers really care about.
Negotiations in B2B markets are increasingly complex and pricing professionals must continue to adapt.
Not only must pricing understand and quantify the value of their products and services, but they must also partner with their sales teams to defend that value.
If you fail you do so, professional buyers are trained and ready to take away any profit you knowingly, or often unknowingly, concede.
Hear more from Patrick during the Pricing In Crisis Virtual Summit event this June!