Every business has its own internal struggles, but sometimes, a common thread emerges that extends across the entire industry. Conflict can emerge between sales and pricing teams in the distribution and wholesale industry. What are the most common disagreements between these two parts of the organization? Pricing flexibility vs maximizing profit, often expressed through the application of discounts.
For example, the sales team may want to hand out discounts in the name of closing more deals, while the pricing team works overtime loading in rigid target prices. For most organizations, the best result lies somewhere in the middle: Salespeople need to adhere to pricing guidelines to preserve margins, but pricing teams need to quickly respond to changes in the market. Interestingly, sales commission plans often make it beneficial to sell products at the highest margin possible. So, why is there conflict?
Pricing Decisions are often Emotional
Put yourself in the salesperson’s place. You’re in the line of fire and responsible for the customer’s happiness (happy customers buy more, right?). And it’s human nature to avoid uncomfortable situations. Common reasons salespeople discount:
- Fear of losing the order
- Avoidance of conflict
- Desire to make friends and be the hero
- Lack of information/confidence in the price presented
- Competitive feedback
Did you notice we slipped in that last one? It’s the only one of the group that is based on data. Data is the antidote. Afraid of losing the order? See the company-wide history of selling at that price. Afraid of conflict? Use facts to back up your price. Want to be the hero? Engage with your customer around the data to discuss how they can get better pricing.
Price Management Solutions Supercharge Sales
There’s no longer any margin for error in establishing prices.
How do you get the data you need in real time when you need it? Pricing management solutions make a real difference. They give the sales team access to valuable information that can help them close bigger, better deals. Price management solutions instantly reveal relevant customer data to salespeople, including:
- Historical prices given to the customer
- Individual product margins
- Customer ranking and contributing factors to pricing suggestions
- Target prices based on data and measured against similar customers
Simply put, the best way to equip your sales team is with a wealth of easily accessible information. All of this together provides the visibility salespeople need to believe in the data and make strategic decisions instead of reactive ones. Additional features you might find beneficial:
- Detailed Customer Profiles – Are they an “A” customer? Why or why not?
- Integration into your ERP – deliver target prices to the point of sale or quote
- Performance reporting – Are overrides being reduced? Is profit going up or down with your pricing changes?
Working with a Partner
While there are always some growing pains, pricing management solutions should ultimately make the sales team’s lives easier and more effective. Having some expert guidance will maximize the benefits, reduce friction between teams, and reduce implementation times.
epaCUBE’s pricing optimization suite wasbuilt BY distributors FOR distributors. For over 20 years, we’ve been building solutions to give distributors access to the technology, tools, and support they need to best compete. To see more of our recommendations, check out The Distributor’s Guide to 2023 here!