Is Your Pricing Strategy Aligned with Your Growth Strategy?
If your pricing strategy does not fit your sales strategy, sales capabilities, or marketplace it will be difficult to grow profitably. High performing sales leaders know that you must align your pricing strategy with your growth strategy. Smart pricing pays off because it supports both sellers’ incentives and improved performance.
A Case of Pricing Misalignment
What happens if your sales compensation predominately focuses on revenue generation? Your sales force may be incentivized to close more deals but at lower margins. With little payoff for sales reps to negotiate for value-based pricing, this pricing strategy may be at odds with your plans for better margins.
The reverse can also be true. One recent sales team attending solution selling training complained that they had to jump through onerous internal legal and financial hoops to close deals even though they were trying to rapidly increase market share to protect an adjacent business line. Misaligned pricing strategies can seriously undercut a company’s unique plans for success.
Unfortunately, Poor Pricing Practices Are Common
In a recent survey conducted by Bain, almost 85% of executives responded that their pricing decisions could improve. But they were unsure what factors were most important in crafting a pricing strategy that would boost the performance of their sales force while improving profits. Don’t let misaligned pricing strategies derail your growth plans.
What Can Make the Difference
In looking at companies that successfully accomplish both objectives, analysts found these companies had three practices in common. First, they customized their pricing to individual customers. Second, they made sure that the strategy behind pricing was in sync with sales compensation. And third, they provided relevant and meaningful development programs for both pricing and sales teams.
3 Steps to Align Your Pricing Strategy with Your Growth Strategy
The Bottom Line
Even though the highest performing sellers focus on value over price, you cannot let a misaligned pricing strategy or culture get in the way of sales success. If you want to improve pricing decisions, align your pricing strategy with your sales strategy, culture, and compensation. Then ensure high levels of transparency so that every can see the impact of each deal’s price.
To learn more about getting your sales team aligned, download How to Optimize Your Sales Force in the Face of Increased Performance Pressure
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