For our May Webinar, Joanne Smith shared strategies to overcome common pricing misconceptions B2B businesses make during times of economic uncertainty. To conclude the webinar, she answered some questions from the audience. Here are her live answers:
Of the seven pitfalls, which ones do you most commonly see businesses struggle with? Which ones have you seen lead to the biggest negative impact?
Okay, so tough question here because they’re all important, but I would think there’s two that go right to my mind.
First, if we really think that we don’t impact our market and we’re just playing in our own little bubble, then all things fall apart. Even in good times, you don’t go up and you go down farther. And maybe on the sales side, we so often think our salespeople are strong at price negotiations and they are, in general, not. So when you’re messing up, deal by deal, you’re affecting that deal, and you’re affecting the total market. So I would say both of those are probably the two most common ones that jumped to my mind more than anything.
Which stakeholders in a B2B business should be involved in the crisis team?
So it can be any small team, but in general, you have somebody who’s maybe a pricing manager or somebody who can really spend the time. And the key is to have the time and the data to be monitoring all the time to see if anything is changing. If we’re really being successful, if we’re losing volume or whatnot. But because we know pricing should support a business and marketing strategy, your steering team needs to be your business team is, because they’re the ones that have to accept a certain risk and know whether we’re going more niche or penetration. So they should be updated, whether it’s weekly or monthly, to make sure they are on board with the strategy and how it’s coming out.
What specific and learnable skills do you see your average sales person struggle with the most?
So in general, I say, a one day course we can really change them around. There are a number of things that when we put them together, the light bulb goes on off with sales. And if you try and just say, well, it’s only this one thing or it’s only that thing, they don’t really understand the complete picture where the light bulb just starts.
So there is a piece where they need to understand how their behaviors affect the whole market so they recognize they can’t operate in a vacuum. And then there is the piece that says deal by deal. How do I know in any given deal whether I have the pricing power and should hold firm or whether I really better discount and/or walk away. I tend to use an 11 question framework that brings in a lot of skills but comes down to an easy framework that will allow them to make those tough decisions in a way that optimizes the deal. And they do it in context of understanding the whole market.
So how does the utilization of value based pricing and selling impact pricing conversations during uncertain times?
All right, so pretty critical. I don’t care when you’re selling, if you can tell your value story in a better, clearer way you will know you’re going to make higher price and more sales. Now in crisis time we’ve got people that are even more price pressure oriented, and even less likely to want to hear your value story because they are in crisis and they’re more likely to switch to a lower cost offering. So now it becomes very important. You get that value story so they know what they would be walking away from.
Also, when I think of that value story, some customers’ needs actually change. If they are almost going out of business, almost going bankrupt, whatever you thought their needs were six months ago, those needs have changed and a good value conversation allows that dialogue to see what needs are being turned on and off and might allow you to adjust your offering. If in fact they are truly just can’t afford, they are in survival mode, it may be that you need to adjust and the offering and the price aligned with value. But that’s the beauty of a value conversation. It’ll allow you to get there in a win-win way and get you away from just talking price.
How can services be leveraged alongside product offerings during times of uncertainty to either maintain share or price?
So if we think about services, and many of us have a technical service or application development or other kinds of services we do. So it kind of goes back to our last conversation that it should be in your value pricing. If you’re offering those services, you should have that in your value story and help you to maintain share because you add this additional value and you deserve a price for it.
But like I said for those customers that can no longer afford it, it allows you a great dialogue to say, “well, if you can’t afford these services, if you’re willing to give up this yield improvement or whatever my service does for you, then I can give you a lower price and maintain my share.” So, and allows you to distinguish yourselves for those that are still willing to understand and pay for value.
And there will be some that, during crisis times, go right to the value supplier who has their back because they know with this uncertainty, they want somebody that has their back. There will be some that are hunkering down thinking they’re going out of business and they’re going to go low price. And your value story will allow you to strip it out and work with both sides.