It is generally agreed that in most B2B transactions the price is negotiated as part of the overall deal. Price plays an important role in the sales process, but pricing experts and sales often struggle to work together. In the most dysfunctional cases, sales refers to pricing as “the revenue prevention department.”
This needs to change for pricing strategy and execution to have the most positive impact on businesses. Pricing has to fit into best practices in sales and marketing. It has to play a strong supporting role in the sales funnel. To stimulate thinking around this, LeveragePoint published a simple LinkedIn Poll earlier in September. And even if you have taken the poll, you may want to click through and read the latest comments!
Of course this poll is too simple to do much more than stimulate conversation. It used a very simple version of the funnel: Awareness – Understanding – Consideration – Trial – Negotiation. Some commenters wanted to call out other stages in the funnel, such as Interest (one can be aware of and understand an offer and still have no interest, or have interest but not yet be ready to consider it) and Expansion (one can have bought on a very limited basis, and pricing may determine how additional sales scale). These are good points, and are worth considering as you apply pricing expertise to the sales funnel.
In the early going, responses were about equally divided between Consideration and Negotiation as the two critical sales funnel steps where pricing discussions have the most impact. But then, about five days into the poll, the dial turned to Consideration.
This is an important result for those who take the value-based pricing approach. In value-based pricing the price is presented in the context of differentiated value. Most buyers will only begin to consider a solution if they understand its value, what it will do for them and not just what it does. For pricing to have a meaningful impact at the Consideration stage it has to be presented in the context of value. And as buyers at the consideration stage are often considering alternative solutions it is important to get to differentiated value quickly.
LeveragePoint helps you to do this. Our platform uses value-based pricing to establish a value proposition that can be used by sale in customer negotiations to capture price. To learn more see the LeveragePoint solution or contact us through firstname.lastname@example.org.