Pricing is always a touchy subject in sales and can be the stress of many customer conversations.
Imagine the scenario “the worried account manager calls the customer shares the price and waits for an objection from the customer only to go back and adjust the price or desperately try to justify it”
This is the unfortunate reality for a lot of sales and account management professionals. This might describe some of the situations you’ve found yourself in or seen. I know it was for me early in my sales career.
But, it doesn't have to be this painful.
You can experience every client conversation you have with, greater clarity and confidence if you have the right mind-set and approach.
There are four big things that hold many back from confidently sharing prices with their customers:
· They don’t believe they’ll pay it
· They don’t believe it’s worth it
· They don’t know what value they’re bringing
· They don’t know how to articulate the value they’re bringing for the customer
If you struggle with any of these points this post is for you.
There are number of ways to grow sales revenue and profitability with your key clients. Here are a few ideas that you may or may not have seen.
- Up sell - giving your customer something that adds value to the current services or products they have with you.
- Cross sell - selling a completely different product or solution to your customer that meets a different need.
- Result sell - paid premium price based on results of a product or service (something I've used and encouraged others to use where you have a very measurable service or product - upside can be huge)
- Strategic goal sell – This is where you have a clear view of the cost to profit ratio of your service to your customer based on their strategic goals. If you know that this year the additional investment your client spend will result in a greater future result based on already agreed objectives. This is a great position strategy to take.
There is definitely an art to discussing pricing with your key customers that’s worth paying attention to. You can continue with what you do or you can consider the process of thinking I’ll share below. If you do you will far exceed what you may be using today.
What do you do when you're at the point in your customer relationship where you might need to raise prices?
Pricing can be tricky if a long term perspective isn't taken. It's important to build pricing expectations into your agreements to fit the strategic goals with your customers.
The danger with any price increase is most do this out of a reaction to their own costs or needs rather than to the continued growth and value to their customers.
DONT: Go in guns blazing like in the Godfather with an offer your client can't refuse. Particularly if your strategy is justifying the costs to your own business.
It’s critically important to know that your client doesn't care about your costs.
Sounds harsh but it's true. Don't make the mistake of leading with your agenda. Below are four principle thoughts to consider for greater pricing success with your customers.
Lead with your customer in mind
Take a step back and ask yourself the question "what does my customer care about in this relationship?" What do they care about in the current deal they have that I can add more value to? The moment you gain clarity on this you can begin to frame a practical and emotional position around your client’s potential reaction. Leading with what they care about will surprise them and create a more open environment for discussion.
Be honest, direct and value focused
In the context of pricing sometimes the person sitting at the table or over the phone with you won’t know your history. If they do you'll hopefully have clearly documented accounts of your relationship and value you've brought to them. If not it's not a deal breaker.
This next point I'll share must be true for you and if it is then great. If not then you will need to think of what would need to be true for you to share this with your client.
Mention the package at time of purchase was for a fixed time and you're really pleased your client got a lot of value from it. That package will end at X date as your business is moving on with even better services to increase the success they're already seeing with you. You'd like to discuss those options and see in this new phase what this improved package might be best for them.
If the end date or new value is not true for you then you need to find an honest/value focused way to position the change. There is nothing wrong with simply saying the rates will be going up. Be sure to use every conversation with your customer to demonstrate care and their interests. You can also use one of the revenue growth options earlier for ideas on positioning your price.
Be prepared to be incremental and raise rates slowly over time
Sometimes you'll have to be patient for profitability. If you find yourself in a more challenging or complex situation of raising prices. Having a plan for incremental increases in pricing will help. This can be done collaboratively with your client but I recognise every relationship and situation will be different. The point of practising incremental pricing is for two reasons. One: It allows you and your client to work out budget implications upfront so you can forecast better and two: in some cases it allows you to build in greater profitability in the long run when there is planned incremental increases. The best way to do this is half yearly to avoid potential impact on quarterly sales.
Be confident, prepared and don't apologise for your value
It goes without saying
“If you're not mentally ready you won’t be physically prepared" - Tim Grover.
Preparation is key as it will fuel your confidence and clarity of value to your customer. I see it too many times that price conversations are done with over sensitivity and cautiousness. Your client needs to believe you when you make the request.
The confidence and clarity you have going into the conversation matters. You don't do this arrogantly or with an attitude. You must approach the conversation with the right energy, empathy, expectation and certainty around what you're offering. This will give your client confidence of moving forward with suggestions you've made.
If you're a key account manager, consultant or sales leader who recognises the continued importance to master deepening, differentiating and growing your key client relationships. Get in touch at www.jermaineedwards.com
New Key Account thinking that transforms customer sales and relationships results