3 Steps to Align Your Pricing Strategy with Your Growth Strategy

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

1. Be Sure Your Sales Strategy Is Clear Enough
   Can you clearly describe your sales strategy? Can your employees?  Is it being implemented consistently across the company?  Before you worry about your pricing strategy, make sure that both your business and your sales strategies are clear enough, believable enough, and implementable enough to win.If you cannot describe your ideal target client, your value proposition, and the two or three big sales moves for the next twelve months, you have sales strategy work to do.
2. Align Your Sales Culture with your Sales Strategy
   Once your sales strategy is clear enough, make sure that your sales culture – the way work gets done and the way people think – is 100% aligned with your sales strategy. Then tie those desired cultural behaviors to meaningful incentives and consequences.  You want people to move toward the desired behaviors and away from the misaligned behaviors.
3. Align Your Pricing Strategy with Your Sales Strategy and Culture
   Once your sales strategy and culture are clear and in sync, it is time to customize pricing strategies, align sales compensation, and then lastly to train sales, marketing, finance, legal, customer service and anyone else involved in the sales process on how and why you price the way that you do.

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