It’s often assumed that CEOs and CFOs are the head of enterprise finance, but truthfully, financial decisions are made at all levels of a company, whether it’s for better or for worse.
Salespeople, operating on little more than intuition, will sometimes quote prices that benefit their client relationships more than the company's finances. No amount of thoroughly analyzed pricing reports, massive spreadsheets, business intelligence tools or strategic financial goals can override gut-feel pricing.
This isn’t due to some intrinsic flaw in our sales teams — it’s due to misaligned incentives. Pricing teams can’t provide market-aligned, updated pricing for each unique scenario salespeople face, which causes a lack of contextual rationale as to why prices need to change and, more importantly, why the new prices are justified given a complex set of circumstances. So, salespeople shot from the hip, pricing in their own unique way. I have witnessed this problem grow so profound that pricing was referred to in jest as “sales prevention.”
The growth of E-commerce and the impacts of Covid-19 exacerbated the pricing-sales challenge, as the majority of transactions shifted to digital channels and presented new, difficult-to-tackle pricing considerations. Only by standardizing and digitizing pricing processes will businesses operate at an internet-fast speed and scale. When deployed thoughtfully, these new processes can fix the long-standing misalignment between sales and finance and lay the foundation for future competitive success.
A Quickening Evolution
By forcing most transactions to occur remotely, E-commerce quickly became the most essential sales channel. In the process, the pandemic exposed the vulnerabilities of the low-tech model, particularly with respect to the advanced pricing, product and other commercial recommendations that customers expect. Additionally, sales teams themselves had to quickly adapt to life without in-person customer visits, pivoting to teleconferencing and videoconferencing to interact with customers.
Given this abrupt shift, it’s more critical than ever to have dynamic solutions that can quickly ingest new data and information and produce tailored insights such as the right price to quote, the right product to pitch, at the right moment and in the right channel.
Humans & Technology, Working Together
Data science and software have evolved to solve these complex issues, “eating” spreadsheets to provide updated, market-aligned pricing for every possible scenario a salesperson might face. The internet has a greater memory capacity than teams of humans; it operates at a speed and scale that is computed in nanoseconds and zettabytes. Attempting to capture the scale and scope of E-commerce sales on a spreadsheet becomes an exercise in futility.
The next step involves the people in the organization. Change begins with the pricing team, who are closest to the new data-driven tools. Pricing analysts spend less time reviewing and approving pricing exception requests from sales and more time deploying margin- and revenue-driving pricing strategies across the business and across channels. The pricing role thus elevates from the blocking and tackling to be much more strategic. As the company's strategy evolves, pricing managers quickly adapt their campaigns accordingly.
Out in the field (or on the phone), salespeople can proactively offer prices that are competitive within their target markets instead of asking for pricing approval. They respond faster to customers and ultimately close more profitable deals. With embedded pricing analytics, it’s easy for them to dig into the rationale behind each price and see that price recommendations are in-step with similar customer, product, geographic, competitive or other circumstances, allowing them to quote with confidence.
The State Of B2B Sales
Traditional B2B sales practices, such as in-person sales and “seat of your pants” pricing, are now obsolete. The online competitive field is increasing quickly, becoming crowded by new, born-in-the-cloud competitors as well as traditional competitors that are rapidly enhancing their digital capabilities. Not to mention the elephant in the B2B room: With five million products and frictionless service, Amazon Business is an ever-growing threat.
In isolation, the occasional missed margin opportunity, commoditized product or sale lost to the competition does not pose an existential threat. But there’s a nagging (and correct) instinct that small improvements can lead to big gains. In time, these small improvements will not only digitally transform your B2B sales team to keep up with trends in E-commerce but prepare it for a data-intensive future.
Greg Peters is the Chairman, CEO and President of Zilliant. Under Peters’ leadership, Zilliant has grown into one of the leading providers in predictive B2B sales guidance and pioneered new approaches for companies to harness the power of big data. Prior to Zilliant, Peters served as president and CEO of Vignette. He also served as president and chief executive officer of Logic Works, Inc. and controller and chief financial officer for Micrografx, Inc. Greg sits on the board of directors at LiquidFrameworks and Rhodes College, and is an accomplished industry speaker who has appeared at numerous leading industry events.