Aligning your winning Sales Team to your Pricing Strategy

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Start with Why, a book written by Simon Sinek, touts that you can inspire action by getting people to buy into your purpose. The ‘why’ discussed in the book is philosophical in nature yet has practical application. He explains why companies like Apple are successful versus ones with declining market share like K-Mart. His famous statement is “People don’t buy what you do… They buy why you do it.” This is perfect. Now you know everything you need to know to inspire change, right? NO! This is only a part of the winning formula. As you read that statement, you may have thought that on the surface it makes sense but you likely wondered to yourself, “Okay, so what?” or "How do I do it?" or "How do I implement it real time with my team?"

 

 

This is a similar reaction that your sales force had the last time they were informed by “upper management” that their performance needed to improve to meet their quotas so that margins could be met, or bookings could increase, or so the company would make their number. They have questions, and you must provide answers. As we are all aware and most times practice ourselves is a top down management structure where strategies, direction and expectations get driven from above, with little to no buy in or explanation, true?

The easiest lever to pull in regards to margin, revenue, or EBITDA is often pricing. It seems easy to increase price to increase bottom-line, but in reality this is not always the case. Your pricing, however, is very complex and raising prices is not as straightforward solution as it may appear on the surface. Your pricing strategy is only effective if you align the people who have direct control of your pricing – the sales team. When you align you gain buy in which ultimately gains trust from the team and this is then transferred to the prospective client.

There are four simple reasons that sales forces are NOT aligned to a pricing strategy: Value, Visibility, Alignment, and Understanding.

 

Value

Salespeople often have limited understanding of company value compared to their competitors in the marketplace. Value, unlike energy, can be both created and destroyed. In fact, pricing has a very direct correlation to the perceived value of your company and your products.

A lack of understanding of company value can be detrimental and the profit and margins will suffer as discounting will become rampant. Our Pricing Practice Lead always coaches me that discounting is one-way street that never reverts regardless of market conditions. Like the Pringles slogan, “once you pop, the fun don’t stop” — once you discount, you can’t revert without drastic changes and more drastic repercussions.

 

Visibility


Salespeople often don’t have good visibility into the pricing strategy neither from an internal process never mind from the clients perspective. I remember working with a client that had a clear pricing strategy for setting prices. Their pricing practice lead was a seasoned vet, yet every time we talked to sales reps or sales operations, they would discount frivolously and make statements like, “I guess we keep the price high to allow for discounts.” This was indeed troubling. How could I have two conversations about the same topic and walk away with opposing opinions? I thought to myself, “No wonder we are here; the left hand doesn’t know what the right is doing or why it’s doing it.”

There’s a simple solution for this: Visibility. The quickest way to get the attention of a salesperson, or any person for that matter, is through their pockets. I think you see where I’m going with this. Align the pricing strategy to sales incentives. As a Business Owner, Entrepreneur, Manager, CFO etc., you likely care about margin, so you need to make your sales force care about margins as well. Mark Stiving, the guru of pricing, once told a story of a time when he was conducting a training session and 10 minutes into his session someone asked, “How is this going to make us more money? We are compensated on revenue.” Quota and incentives drive behavior. If there is no visibility into the strategy, how can reps behave accordingly? They can’t.

 

Alignment


Piggie-backing off Visibility, we have Alignment. Reps must know what the strategists and pricing team are thinking, and their behavior must align to the company’s financial goals.

Margin-based incentive isn’t for everyone. If the company’s goals are to create long-term stability, then bookings may be a big emphasis because bookings lead to revenue. However, if you have a solutions business then profit and margin are key. Your sales team should be incentivized accordingly. Your payout curve should include steep excellence payout for desired levels of margin reached. You should know your costs, headcount, and quota. Offer 2.5x-3.5x incentives for margins that exceed the target and start that payout early around 110%-120% of quota attainment. To get concrete on that number, simply take a histogram or bell curve of quota attainment from the last 4 quarters and determine where the top 5-10% of your sales team sit. There’s your excellence point. These are the reps that are driving profit and maintaining margin. This also gives the bulk of the bell curve an incentive to hit target.

 

Understanding


Understanding is key for any change.

Does your sales team understand why margins are important? Do they know what the strategy is? I suggest you inform them ASAP. This is the path to building sales champions within the sales force because the best salespeople align their activities to their incentive plan or so they should be. Secondary to that do you know what activities drive sales? Are you aware that not all activities are conducive to driving sales looking at every sales person in the team means they could be needing to focus on different activities to reach their targets. Let me elaborate. If a particular sales person is really strong at making the first meeting in other words cold calling, They however, are not closing any deals the focus should be on the latter part on the sales process. This could be uncovering the need, handling objections or asking for the order. On the flip side it could be that another sales person avoids looking for new business and rarely drives their cold calling or prospecting. They however, on the other hand when they are in front of the client bring the business home. Their focus should be on the first part of the sales process, get the idea?

These insights create an understanding for the sales person on where their focus should be. Driving activities from a point of understanding will create buy in. When you create buy in the sales person will focus on what is important and the cycles cycle will be complete without discounting or sacrificing your bottom-line. The key here is do you as the sales leader understand firstly and secondly do you know how to create the understanding within your team? Perhaps starting with yourself may be the starting point and then driving the idea home by gaining buy in, understanding, and all the other pointers.

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The Faces of a Sales Manager

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Are you an up and coming Salesperson ready to take on the role of managing a team OR a seasoned Sales Manager in need of some fresh insight, direction and tools.

Alternatively you could be a Senior Manager, managing a group of Sales Managers and you have utilized all avenues to keep them motivated, on target and have shared all your experience and knowledge and need something new and fresh?


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Are you an up and coming Salesperson ready to take on the role of managing a team OR a seasoned Sales Manager in need of some fresh insight, direction and tools.

Alternatively you could be a Senior Manager, managing a group of Sales Managers and you have utilized all avenues to keep them motivated, on target and have shared all your experience and knowledge and need something new and fresh?
This is just a stand alone modular course which is also included as a limited time special offer in
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Faces of a Sales Manager Mini Course 1

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Alternatively you could be a Senior Manager, managing a group of Sales Managers and you have utilized all avenues to keep them motivated, on target and have shared all your experience and knowledge and need something new and fresh?

We have taken select segments:
Chapters 1, 2, 3 & 4 from the full course
to create a mini course to
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Faces of a Sales Manager Mini Course 2

ZAR 3,500.00

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Are you an up and coming Salesperson ready to take on the role of managing a team OR a seasoned Sales Manager in need of some fresh insight, direction and tools.

Alternatively you could be a Senior Manager, managing a group of Sales Managers and you have utilized all avenues to keep them motivated, on target and have shared all your experience and knowledge and need something new and fresh?

We have taken select segments:
Chapters 5, 6, 7 & 8 from the full course
to create a mini course to
bring the price down for you!

Then this course is for you!

Faces of a Sales Manager Mini Course 3

ZAR 3,500.00

MINI COURSE
Are you an up and coming Salesperson ready to take on the role of managing a team OR a seasoned Sales Manager in need of some fresh insight, direction and tools.

Alternatively you could be a Senior Manager, managing a group of Sales Managers and you have utilized all avenues to keep them motivated, on target and have shared all your experience and knowledge and need something new and fresh?
We have taken select segments:
Chapters 2, 4, 6 & 7 from the full course
to create a mini course to
bring the price down for you!

Then this course is for you!

Faces of a Sales Manager Mini Course 4

ZAR 3,500.00

MINI COURSE
Are you an up and coming Salesperson ready to take on the role of managing a team OR a seasoned Sales Manager in need of some fresh insight, direction and tools.

Alternatively you could be a Senior Manager, managing a group of Sales Managers and you have utilized all avenues to keep them motivated, on target and have shared all your experience and knowledge and need something new and fresh?
We have taken select segments:
Chapters 1, 4, 5 & 6 from the full course
to create a mini course to
bring the price down for you!

Then this course is for you!

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About Landie Stevens

Landie Stevens has been involved in various aspects of sales and business management over the past twenty five plus years, seventeen of those years have been within a senior management role and over the last eight years she has been running her own national coaching, training and consulting platform, both face to face and online.

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