Bad data is a sales person’s worst nightmare. Imagine the scenario: A sales person is given a bad price recommendation and they get burned. They are not going to trust any more recommendations after that.
While crunching the data is only part of the overall process of building a margin-enhancing infrastructure, getting it right is key to making the rest fall into place. Here are three ways to make sure your pricing infrastructure has a good foundation:
Sweat the Details
Unlike a lot of our competitors, Profit2 does does not focus only on a grid matrix. We work individually with clients to understand how much their customers buy over time and target incidental purchases where the customer is going to be less price sensitive. Our methodology factors in not only the volume of an individual sale, but the size and purchase frequency of the customer to create the right price for each specific customer and each specific order.
On the converse, it is critical to identify price sensitive sales and protect them. One size does not fit all. Be wary of vendors that are trying to sell “packaged” pricing systems that do not customize exclusions. We’ll even tell our clients where their prices are too high if that’s what’s best for them.
Evaluate ALL your prices
This might seem obvious, but we see a lot of margin “experts” focus only on a segment of products for analysis. It only takes a few bad prices for a sales person to start ignoring the system.
Stay on top of prices
60% of prices need to be modified at least once a year. If your pricing system goes stale it will lead to sales person distrust. A sales force that doesn’t trust your prices will slip back into their old habits and any initial margin gains will erode away. A Margin-Enhancing infrastructure must include ongoing pricing maintenance.
The bottom line is: If your pricing data isn’t helping your sales people make better decisions – because it’s stale or inaccurate or untrusted – then it’s just a bunch of numbers in a computer. It’s certainly not helping you increase your margin.