All right. Well, hello and thank you again
for joining me for another episode of the professional
pricing Society podcast. My name is Terrance and we have
a Duo today to help us discuss the topic of optimizing pricing
through sales activation. Now, before I introduce these
gentlemen, I want to remind all of our listeners that we will be
in Dallas, Texas, this upcoming May the 34th annual spring
pricing and workshop. Conference will be taking place
May 2nd through the 5th. It is definitely a conference.
You won't want to miss and to learn more about that
conference. And also to register, you can
feel free to visit our website at pricing Society.com our
speakers. Today will also be in attendance
for that conference as they look to spearhead the discussion of
optimizing pricing through sales activation with today's today,
being the teaser, if you will, Pete Morelli is a vice president
at holding advisors and leads the company's sales Consulting
practice. He helps organizations again
Clarity around the value of they provide with sales and
negotiation strategies to win more deals at higher.
Is Pete joins us with over 20 years of experience and
procurement cells and pricing transformation and deal and
coaching Adnan. Akbar, is a senior director of
pricing at holding advisors and is responsible for helping
clients grow by realizing their full potential of their
offerings. Prior to joining the hold invite
holding advisers. He spent the last 12 years of
his career focused on the growth initiatives within Fortune, 500
companies including building pricing organizations service
offering development and sales strategy.
Gentlemen, how are we doing today doing well?
Thanks. Terrence paid to be here.
Good, I'm glad to have you guys. Yep, it's better to be here for
sure. Said to have you guys here on
this podcast, and also excited to see you guys in May for your
Workshop. But let's go ahead and dive
right into today's discussion about optimizing pricing through
cells Activation. So, you know, let me go ahead
and ask the first question and you both can feel free to chime
in or however you want to respond to these questions.
Why do price you need a workshop on opt As in price through cells
Activation. So little bit of kind of
background on this one because we put some thought into the
scope of the workshop. And this was in part building
upon the workshop that Pete and I conducted about a year ago in
Chicago where we walked attendees through, a lot of the
required analyses to do to really find out some of the
gaps. In in pricing.
So, we call that a root cause analysis workshop and the
general theme of that was we as organizations have a very
significant amount of data, whether that's transactional
data, whether that's usage data, whether that's customer data,
Etc, that can point to different problems.
So then the question becomes, how do you put that all together
in a useful? Way that gives you a sense of
where there is pricing opportunity.
So it's again, very heavy for heavily focused on data so we
wanted to build on that. Game of for this Workshop to
say, okay, now that we have a sense of what the pricing should
be, how do we operationalize that within an organization and
more specifically, how do we kind of bridge that gap between
say prices and and sales to be effective in price realization?
So that's the theme of this Workshop to say.
Okay, now that we are now that we have a price.
Now what what are the things that we can do to make this
price roll outfits? Peaceful.
Yeah. And just to build on that.
I mean, as prices we know how much effort we put into both the
art and the science of creating that right price and all of the
infrastructure around that and the architecture of the price
Model itself. But that confidence, and then
vision for how a price should be realized in a business is not
shared equally by all team members and this partnership
between pricing and sales is such a critical price, piece of
the puzzle to move from that. Set price to get price.
Okay, good, that's very interesting.
Now, let me ask you this, if pricing teams seem to be doing
their job correctly, what functions are falling short at
the moment. Well, I think if you were to ask
folks in the companies we work with, you would get different
answers and it would almost sound like everybody has an
opportunity to improve for. So, for example, you might have
product teams that look for Or different research and insights
from the marketing team. Whereas the marketing team might
not know of the product teams roadmaps and what they should be
kind of putting out in the marketplace.
Whereas sales might think list prices are too high, too low or
too high, too. Out of line with competitive
pressures. They face and and yeah pricing
teams might say well sales gets too much, discount Authority.
So I think there's actually a lot of a lot of opportunity
there where everyone can kind of improve a little bit, but it's
more about understanding that it is.
Someone falling short. I love this question.
I was hoping he was going to call somebody out.
It's so so this one it's really interesting to me because of the
level of Market volatility that that we're seeing, right?
Like I find that determining what the right price is, is
really toughen environment, right?
Inflation is is at play and it varies by sector and I think the
reality is That it's really hard for prices to arrive at price.
It's really hard for businesses to know how much they should be
paying for things and when you kind of pick up inflation apart
on a sector-by-sector basis, right?
It's even more. It can be even, even more
volatile. So from a producer's
perspective, you do all this work to assess what that price
should be. And then a seller has to go out
and position that price to their customers.
But the reality is particularly in B2B environment when sellers
are going out Auditioning, what are often price increases to
their customers? Their customers are facing a lot
of headwinds to because their organizations costs have gone up
and, you know, budgets are being cut.
So then the question is, how do they take this information and
communicate it in an environment that hell's all this volatility
and and all this uncertainty. So getting back to the question,
right? Which functions are falling
short. I think it's exactly what
peaches said where, you know, it's not necessarily a single
organization. Ian, but there is what we think
significant opportunity in the short term to come up with
strategies to communicate price and value in these
conversations. And we want to walk our
audiences through some really kind of effective ways that
we've seen that happen in the market.
Yeah. So it sounds like it's a
collaborative effort, you know, it's not just on one team or
even two teams. It could be a an entire
organization coming together to assess the process and
essentially come up with a final solution when it comes to the
pricing realm. Now, look the value to price
process should be familiar to most prized sirs but what where
are the areas where sales and pricing see the world
differently? Yeah, I'll take this one off.
I mean, I think there's some fundamental differences and how
prices and sales team, see the world.
If we just think through a flow that, you know, a lot of prices
would be familiar with from kind of what's your top level price
strategy, you might have the prices think, prophets are K,
whereas the sales team or is often dissented on volume, and
they'll just think about making that sale for Revenue.
So that's one area as you move towards value.
You can think about the pricing team trying to quantify Defy
that value to share equitably in a in a price and that's very
quantitative mindset. Whereas the sales team might
think qualitative relationships and then as you get more towards
the pricing, you know, you kind of think of the, the rule-based
nuances and different packages at the pricing Team sets,
whereas the, the sales team wants a very simple, go to
market structures, they can think about it and communicate
it efficiently. And then finally, when you
think, you know the price Getting motion.
How do we actually realize these prices?
That the pricing team is often taking a portfolio View and
thinking about will take some losses with the winds to protect
the price and the target. The segment's, we really want,
whereas, that, that seller takes a very account, their world
specific point of view, about hate losing this deal.
Just means a lot to me, even though if it means last in the
grand scheme of things to her portfolio.
So you really have to think about those different nuances.
Has about how they see the world to try to come to some
compromise. Yeah, I think there's there's
benefit on both sides, right? If I'll preiser put some effort
and said puts themselves in a salesperson shoes, meaning now
that I have this price change, what is it specifically that I
would say in a customer conversation to position this
price change, right? There's absolute benefit in
doing that because that's going to start to bridge that that
Chasm. And then the inverse is also
true. Are a seller puts himself in an
Enterprise, your shoes where they are managing, what the
product or service should be valued at.
It is a fair value. So then the question is, how do
we position that in the marketplace now that we know the
fair value? So a big part of this equation
is making sure that you have that fair value, right?
Then you can defend it in all parts of the organization.
Not just pricing, not Just sales, but anyone within your
organization, you could be customer service functions, it
could be account management function.
So, you know, that's in part. What I really like about pricing
is that it just touches so many different areas of, of
organizations. We talk about pricing and sales
often because it's in many ways a world we live in but it
certainly can be broader than that.
Sure, absolutely, okay. That's interesting.
You made a point about, you know, understanding the fair
value, you know, given those different perspectives you guys
just described. What what can we do to increase
the effectiveness of? Pricing sales partnership moving
forward. Yeah.
I would say the first thing is you have to establish a common
set of beliefs that both Chrysler's and sellers can agree
on. So, this is about, what is the
value that our company is actually provide to the
marketplace. So when we think about
conducting value research, whether that's quantitative
survey oriented, or qualitative interview oriented kind of
Methodist, you really want to understand why what'd you do do
is worth by anshel dollars to your end customers and it
pricing and sales can agree on this.
That forms the foundation of how you can have a conversation
about, why these are good prices, why you should as a
salesperson be confident and communicating the value of those
services and products to the marketplace.
And really, this is pricing 101 stuff, but when you have those
value anchor points established, you can make your gift, get
trade-offs. And Form, the groundwork for
conducting, those negotiation conversations all the way to the
end of that, you know, get price at the Spectrum.
Look at this one through the lens of a recent project that we
were on where we had a client and they had what was a highly
differentiated product? It was one of those situations
where the value of this thing was head significantly.
Increased as a result of covid because it enabled some remote
operations. You know there are certain
sectors where that did occur. So what happened was they
realize if this mean that this was highly differentiated and
they priced at what they thought was a fair value is on the
higher end. So sales went out started to
sell this thing and you know in 2020 had some level of success
but then as things changed and you know we're getting back into
a sense of normalcy. Well, you wasn't quite there but
it was still pretty highly differentiated point being that
what happened was they were priced too high and they were
having a lot of trouble positioning this in the
marketplace. And when we started to pick this
apart and look internally at their data, we saw that their
realized price for the sales that they were getting was, you
know, drastically lower than their list price right into the
realm of maybe 30, 40 percent and then, you know, we started
talking to the folks internally and they said, yeah, this is
we're just not able to sell this.
Thing. It's causing a lot of friction
in the organization. It's going through reviews.
There's like multiple management multiple layers of management
had to be involved. So they can put this in the
marketplace and they can get these discounts approved.
So, what we did is we said, okay, let's take a step back.
Let's figure out what the actual value is today in today's
economic environment, and then recommend a list products.
So then we came up with a list price and then said, okay, if
you saw it at this price what's there's a few things going to
happen. One is All this kind of internal
effort and friction is going to be eliminated because this is
actual right price. You're not gonna have to go
through this. Discounting process to your
volume is going to increase because you're not going to
customers that are going to frown at this initial price that
you had proposed. So you're going to get
incremental volume. And by the way, we have verified
this with with customers and then third and perhaps most
importantly is your actual realize price is going to go up
because this excessive discounting You're having for
the deals that are closing or going to decrease.
So just kind of in example of why, knowing the value is so
important in a sales conversation, because in this
scenario, right? We recommended a lower list
price, but the ultimate result was a higher realized price.
Do the factors that I just mentioned?
Mmm. That's really interesting
actually. Okay, that's good.
Now that's all one. That's a whole process of
analyzing and evaluating that. Situation is that is that type
of situation, common. Sure.
I'd say, yeah, it varies but certainly get all.
All flavors, I'm sure Pete can speak to some situations where
that's happened. Yeah, I was gonna say without
even getting another specific example.
I think that the fundamental truth about value-based pricing
is that sometimes he absolutely go in and partner with the
client and you find those areas of opportunity where the value
aligned price is a price increase.
And that means good. Things for the revenue but
there's also those kind of hard truth situations where when you
do the research and the value is actually lower than they
expected and their prices at aligned with the marketplace in
the wrong direction. You have to deliver that that
news also and say you know, maybe the potential of this
particular product or service is not what you thought it was
going to be. But the way you can best
leverage at or realize it is to set a value align the price that
maybe lower them, the price that they went in with and and that's
kind of a Hindsight lesson learned that you got to get the
pricing teams involved sooner especially for new product
Innovations npi's because you may have priced it wrong from
the get-go and then he kind of got a upside-down product at the
end of the day. Wow.
Okay good to hear good news, that's a nugget from myself and
I'm sure it's a nugget for the listeners as well.
Now you might have touched on this as well before but just for
clarity, you know, but when it comes to the relationship
between prices and sellers, how can prices Help sellers, use
that value Foundation to defend those prices.
Simplicity is it's got to be very straightforward any type of
communication that goes out in the marketplace you know as
somebody that enjoys data likes to kind of put together an Excel
document and be very comprehensive.
What I've started to realize is that any type of a sales
conversation has to be focused on value, and that value message
has to be succinct. Meaning, you know, it's got to
be in that elevator pitch type of a format.
It's that combination of Art and Science on.
How do you position that value in a very crisp succinct way
that anybody can understand it. So that's, that's one of the key
things that I like to hone in on.
Yeah, I think that that's great. And then the other one I think
can be a lot of pressures will think about the basic blocking
and tackling that they do in the course of a pricing project or
effort is you know, building in those packages that are tiered
or your good better best. So you give That's sales team
options to pitch a lower value product or service to a budget
constraint customer and or defend the price.
When a given customer asked for that discount, you can say sure.
But we have to take away this item of value.
So, just being thoughtful about how you construct your pricing.
Those kind of 101 level components, the pricing project
actually bear fruit. When you can communicate them
clearly to a salesperson and why, That optionality is there
for them and that kind of helps them establish their give guests
and trade-offs for the negotiation and build those
fences to protect the value that you try to defend as as a
pricing team. Okay, okay, good.
Now, you guys really discussed necessary tools.
If you will, what you both mention.
Is there a certain way to go about positioning this to the
sales team that they can find? It useful?
There's a range of things that come into play.
For sure, you know, we've Incorporated several of them and
think some of which Pete had mentioned, where you want to
have these set of what we call give gets in your back pocket
because inevitably you're going to go to a customer and they're
going to ask for some type of a price concession.
So when asked for Price, concession, you have to be well
equipped to know. Sure I can make a price
concession but you're doing it in exchange for something so
that it's reflective of the values out.
Price, concession, you're going to take with value in, in some
way. That's something that we often
use and, you know, building on that a little bit further, it's
a matter of knowing the competitive market well, so that
you can build out what we call flanking product.
So, for example, if there's a situation where, you know,
getting back to what I said earlier, where there's a highly
differentiated product, but that customer for whatever reason,
perhaps doesn't have the budget to pay, or they don't
necessarily need, say the cattle.
That version of the product for their specific business, that's
okay. You just have to go in and from
a product perspective figure out what is needed.
How do you create a lower priced lower value version of that
product? So that sales teams can go out
there and more effectively defend pricing, you know,
there's a slew of other tools that that come into play that
really depend on the applicability of certain
business situations. Yeah, I'm getting a key enabler
for any of those things. Add Just tipped through is to
bring the sales team in earlier in that pricing process, then
most prices are typically accustomed to.
So it's not only, hey, what do you seen in the marketplace?
But if you can establish that by in earlier with, hey, here's why
we're recommending these prices and the structure you're going
to have better adoption and confidence flowing through to
the commercial end. Okay.
Understood understood. Now is there any additional
advice you would give to Give to someone with your experience
working with B2B clients. I think probably just in.
We think about this pricing sales partnership is to
necessary components of almost every monetization model,
particularly in B2B Industries where you have some sort of
seller initiated or completed process, you know, pricing and
some of the associated activities that are also
informed by, you know, product teams and marketing teams.
They help generally aggregate information and Market Intel to
both set prices and the direction.
But sales, can't simply be an execution function to negotiate
with customers. They really need to be bought in
and just as confident and that price.
And in fact, Seven teams are often the best Devil's Advocate
so you can get because they'll Echo your customer objections,
effectively verbatim. So you're going to get that
truth to some degree. As sometimes people say, sellers
are overly pessimistic or friendly with customers, but I
think if you want to really get what that other side of the
table will say, salespeople, your best Advocate there.
So, when you get them on board and probably sitting next to you
at the desk, to work on a problem rather than across, The
table, I think the results could really be pretty stunning.
I love that. Yeah, that collaboration is
absolutely key and, you know, that kind of Builds on a lot of
what I was going to say where it's just super important to be
laser focused on what is going to move needle within the
organization. So from a pricing perspective,
we've seen teams that get pulled in a lot of different directions
whether that be reporting or whether that be, you know,
getting pulled into the the cost side of things which, which
matter Her. But at the same time, you have
to prioritize in such a way that is going to drive profitability
and pulls the organization together really around the
differentiated value of what they have.
And when that is at the center of pricing and sales activities,
that's what we see. A lot of success.
Okay, all right. Well, Hey, listen, Pete Morelli.
And I like Barbie, I want to thank you so much again for your
time speaking with me today. Now for our listeners, of
course, want to remind you while they will be with us, in May at
our spring conference leading their workshop there.
Now, for the inquiring minds pmf Adnan, where can listeners go to
find out more information about yourselves holding advisors or
any other resource for material Pretty easy to find.
You can just get a hold of the advisors.com and I are both on
and Linkedin and we both have we have a hefty presence with our
company, in terms of thought, leadership and blog posts and
podcasts ourselves that are posted you that channel.
So and finally, you know, at PBS will have a booth will be at a
workshop. We've got a keynote for our
founder of read holdin that he's presenting.
So, we'll, we'll see a lot of the team on site in Dallas.
Okay. Sounds great.
Well, thank you all so much again for listening and we will
see you all in Dallas. Have a good one.
Bye, bye.