What’s your strategy for determining the optimal price for your B2B offering? If you check Wikipedia, the obvious source of all that’s true in the known universe, you’ll find 26 different pricing models or strategies. In this first of a new blog series focused on value pricing, let’s take a closer look and see how you can set prices that benefit both you and your customers.
Much is written these days about the changing nature of B2B marketing. The internet and marketing automation are changing how companies engage customers. Social media is playing a prominent role in shaping customer choices and influencing new trends. Some call these changes “consumerization” of B2B marketing, a potentially game-changing environment for some B2B marketers.
A compelling value proposition is critical to sales success. It can, without a doubt, make or “brake” a sale and is often the root cause when new products or solutions fail to reach their destination. Without a clear value map or an understanding of “what’s in it for them,” prospects have little reason to invest in your offering.
Have you noticed your average sale price dropping?
Maybe it’s because your salespeople are too quick to offer customers a discount when they’re challenged about price. As their manager, it’s up to you to coach your sales reps on techniques to avoid the price discussion altogether or at least delay it until the full value of your solution has been presented.
Here are three tips to help you coach your sales reps in techniques that will help them avoid price discounting and the price discussion altogether.
Most of your prospects will focus on price once they think they have found a product or service that will meet their needs.
It’s normal to want to know how much something will cost. However, it’s best to avoid responding directly to this question until you have established the problem and the value of solving that problem.
Figuring out what to charge for your product may seem as simple as adding up what it costs to make plus a percentage you call profit. Unfortunately, this “markup” or “cost-plus” method is common and can result in money left on the table and unnecessarily slower future growth.
If you aren’t selling on value, you are leaving money on the table. The question is, how much?
Let’s go through the three problems with not selling based on value based on value. Each of these events result in lost revenue and profits. Altogether, it can add up to a significant amount of profit lost.
Traditional sales techniques have always concentrated on closing the sale. Once the sale was complete, there was no further reason to engage with the customer until you had another product to sell. Until a few years ago, software solutions were sold the same way.
Software as a Service (SaaS) and other emerging subscription services changed everything. Marketing and sales must now adapt to a new landscape. One practice in particular has created new challenges; that of offering services using a building block approach. How does a company successfully renew a customer at a higher price as more modules, storage capacity, and users are added?
While it may seem like customers only focus on price, many of them actually place a higher importance on other attributes. By skillfully framing the conversation using your knowledge of those attributes, you can move their focus from price to value.
You begin by building rapport with the customer. During this time, you will want to ask questions about the business and focus the discussion on what problem the customer needs to solve. From the answers the customer provides, you will learn most of the attributes s/he responds to, providing you a pathway away from price.
Successful B2B marketing campaigns attract and engage buyers and decision makers, and set the stage for the sales team to close the deal. More specifically, value selling campaigns emphasize the business value of solving a set of problems rather than the features and functions of the offering and reveal how it can reduce expenses and/or increase revenue.
Providing a business value framework is an excellent way to capture decision makers’ attention and interest. Value selling tools such as interactive assessment tools and value calculators make it easy to provide such a framework and generate leads.
