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Why is Pricing Strategy the Sales Training Gap that Leaders Ignore?

In 2011, we surveyed and interviewed over 12,000 sales people about sales training. When we asked what area of the sales process reps wanted help with, 4 out of 5 answered “Pricing/Justifying Costs/ROI for our product/service”.  Sales people are uncomfortable having the pricing discussion. And leadership is letting them down by not developing their skills.
The impact on the sales force is stalled deals. Sales cycles get extended. Reps pester customers. Managers pester reps. VPs of Sales pester Managers. Everybody is staring at the forecast keeping score. The best sales leaders have changed the game with pricing by involving the key stakeholders (internal and external) early in the sales process. The best leaders use the following 3 steps to solve the Sales Training Gap in Pricing.
#1 – Exit Criteria—does your sales process have exit criteria? Exit Criteria is observable customer behavior that signals the buyer has progressed to the next stage..
Why does this matter—Sales people throw price out too early. Most times customers ask for a number because they have been conditioned to do so by other bad sales people. Unless a customer has clearly articulated all of their problem solving options and ranked them, you cannot discuss price. Why? Because you will have no ability to put a thoughtful proposal together that is focused on what matters to The Customer.

#2 – Collaboration—does your sales process have a step for collaboration with the customer on pricing?

Why does this matter—Budget—is this a replacement spend or new spend? If new, where will the money come from? They will have to create budget and it is your job to show them a believable revenue lift (longer term) or a tangible cost savings (short term). If your solution does not grow revenue or reduce cost In the Eyes of the Customer, you are done. If they don’t have some overwhelming compelling event that is creating urgency for you, the lack of value is the reason for the stall. That is a fact.
#3 – Internal Approvals—does your sales process have a fluid, easy process to get pricing for a customer?
Why does this matter—We see too many companies where non customer facing stakeholders (finance, procurement, legal) are making customer facing decisions without any customer facing knowledge. If this is happening don’t blame them. Blame sales leadership. It is the job of the sales leaders to ensure back office process is smooth and there is trust. Take these people out on some sales calls. Expose them to what it means to get a customer. Show them your customer acquisition cost.
Call To Action –
Make the investment in the 3 stakeholders. Your ability to help your reps, your customers and your company understand pricing is a valuable exercise. The talent management activities above can generate a nice Q1 ROI in a short period of time. If you are looking for ways to execute this flawlessly call my friend John Deris SVP of National Accounts at Ryder or my friend Rick Cibos, Group Director of National Accounts at Ryder. These guys are two of the best.
What tactics have you deployed to manage the pricing discussion internally and externally?
Source: Sales Force Effectiveness Blog on Linkedin (Posted by Matt Sharrers on Fri, Jan 20, 2012)
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