A Managing Director with whom I once worked as an external consultant confided in me that he would never give his sales team full knowledge of his pricing and profitability matrix, on the basis of the fact that they would give it all away!
To some extent, I can understand this view, however as in any delegated task, it’s about empowering and trusting individuals to make decisions within parameters that we all agree are workable. Also, that the sales team in this case have the knowledge and skills and the boundaries to be able to negotiate and price manage in the best possible way, when in the front line.
The reality can very often be that salespeople gravitate to price too quickly, largely due to the fact that they allow themselves and their prospects and customers to do that! Often due to a lack of asertion, control and proactivity early on in their relationship with their prospects and clients, so that there’s often nowhere else to go, other than price!
A very good start point in my view then is to encourage your salespeople to always ask for something in return, before ever conceding on price. This could
be something as simple as asking for payment earlier than 30 days; providing your company with a testimonial; getting them to produce a case study that can be used in your future marketing etc. There’s actually quite a lot you can do when you think about it, other than just focusing in on or moving on price.
Another technique that really works well in my experience when under the cosh on price, is to encourage your salespeople to ask their prospects/customers when being pushed to ask of them ‘Which part of the offer/package they would like to leave out, in order to get somewhere nearer to the lower price?…’
Discussion then takes place around the fact that account managing; customer support; engineer back up or merchandising for example all has a cost to you as a business, so your salespeople will be able to accommodate a lesser price if those services are left out (not that you probably would)!
It’s very interesting to see the reaction here when this technique is deployed and customers/prospects often start backpedalling, having now realised the value of what your salespeople can bring to the party. Establishing more value in what they may have taken for granted prior to that point and shifting the focus away from that of price being the key determinant factor!
Obviously I would encourage you to ensure that your sales team choose the right time, person and environment in which to ask this question (the last thing this should be seen as is facetious). But equally, it can be a very effective ploy in terms of making the prospect/customer sit up and take notice. And perhaps for the first time, consider far more than just the price being king!
More power to your elbow!