Pricing Influences Everything You Do
As a distribution sales executive, your job is to make things happen inside your organization. You are tasked with top-line growth but your role extends into every major driver in your company. While your multiple responsibilities span across many areas such as finance, support, operations and human resources, pricing is a critical element in all.
Here is a brief example of how pricing can influence your many responsibilities as a sales executive:
Optimizing Sales by Group
You have a lot of potential for gross profit improvement buried deep in your sales, product and customer data. Identifying and analyzing them would be easy if you only had one type of customer and one type of product. Unfortunately, most distributors have many different types of customers with different buying behaviors that reflect their unique type of business, industry and particular goals. And distributors must deal with a wide assortment of products and product groups.
You probably deal differently with commodity products than you do noncommodity products. You might have to respond to different competitive positions by market or address technical specifications for certain customers. The amount of data you must analyze to optimize pricing is overwhelming. And as soon as you settle on an analysis, something in your market changes and you have to start over again.
Some products in price-sensitive groups or especially competitive markets may be eligible for special pricing agreements or VIP pricing from your manufacturers and suppliers. But without proper analysis of your pricing and segmentation, you don’t have the proof to negotiate with your vendors. Even worse, you might be angering your best customers with poor pricing policies.
New buyers are often seeking to buy a large bundle of goods for a project or job. They would prefer to purchase all of their requirements from a single distributor if possible unless the price point is over their budget and then they will buy zero. If your price is too high for a particular bundle of products needed for their project, you will lose the entire order. Even worse, you could potentially lose all of your business with that customer. If your price is too low you might keep the customer but lose money.
Pricing issues could affect the loyalty of your best customers. Are you tracking the statistical ceiling of all of your sales transitions? When you sell over the ceiling you are assuming a level of risk because you could potentially lose a customer’s order or even the entire business of that customer. A ceiling operates as a basic framework to keep your pricing decisions in range for all your customers yet most of your customers are probably priced inconsistently, causing them to mistrust your pricing and shop around for a better deal.
Penetration of Existing Accounts
Just because a customer is buying from you consistently, that doesn’t mean you’re winning all of their business. By comparing pricing and sales transactions of different customer types across different product groups, you will have a better understanding of which customers could be targeted for deeper share of wallet.
Sales Force Effectiveness
Why are some sales reps able to gain higher margins, even when they sell the same group of products to similar customers as reps with lower margins? You might be spending hours each week analyzing metrics such as call volume, order volume and more. Yet how much time are you spending analyzing the most important element of your sales performance, gross margin? With epaCUBE you will be able to see the overall effectiveness and productivity of your sales team and compare each rep to others in their same position or level.