5 Tips for Driving Price Performance

5 Tips for Driving Price Performance

Is price performance on your radar screen? If you are like most companies, your pricing management efforts fall short of a strategic pricing process in that they are limited to periodic analyses of historical practices and pricing events. A more proactive approach to strengthening your pricing performance includes data analysis, pricing policies and implementation, among other elements. And while analyses and supportive policies are pivotal, the key to realizing true pricing improvement rests on your implementation team – namely, your sales force.

Think of it this way. Building a successful pricing program without a strong implementation program is like building a car without wheels. It may have a lot of potential, but it won’t go anywhere.

Successful implementation requires price performance accountability. Here are five relatively simple steps for improving price performance accountability through your sales team.

The 5 Tips for Driving Price Performance

  1.  Include a price performance requirement in the sales job description. Communicate to the sales team that pricing performance management at the point of sale is important. This won’t change pricing culture all by itself, but it will help set the tone for pricing expectations going forward.
  2. Set price performance goals for each sales rep. Like sales goals, each rep should have a price performance target. For instance, reduce discounting by 1% in the next year.
  3.  Measure and track sales team price performance. Monthly reports that provide visibility to actual achievement versus price performance goals set the stage for managing pricing at the sales team level.
  4. Conduct individual price performance reviews. Sit down with each rep and review their price performance each month or quarter. Discuss the challenges and opportunities for price improvement and create monthly plans for reaching goals.
  5. Add a price performance feature to the compensation plan. Nothing gets a good rep’s attention like incentives and rewards. Create a specific pricing incentive that rewards price performance and goal achievement.

These five actions help send the message that each sales rep is expected to play an active role in upholding the company’s pricing policies and goals. This may feel like a foreign concept to your team at first, but, over time, it will become a natural part of your organization’s sales culture.

Consider training your sales team, too, on pricing execution and its impact on company financial performance. Every effort you make toward engaging your sales team in your strategic pricing process takes you a step closer to excellence in managing pricing performance.

About the Author

Ralph Zuponcic

President, PricePoint Partners

Ralph is a national authority on strategic pricing. He has been featured in publications including The Wall Street Journal, Fortune Small Business, CFO Magazine and Marketing News.

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