10 Ideas for Best Practice Pricing Analytics in B2B

1. Share, Share, Share. If you do not share your pricing analytics internally then it just becomes pretty charts for a small group of people. Pricing analytics is strongest when the insights are actually used for steering and changing the business. Sales people who have actionable insights will do much better than those who do not.
2. Establish a common vocabulary internally for how to measure prices, net prices, pocket prices, discounts etc.
3. Measure pocket price but realize that the (B2B) customer does not always recognize or accept this measure. It is your internal measure.
4. Include as many “pricing” elements as possible;including price, discounts, rebates, lump sums, “customer investment”, favorable terms and much more.
5. Build a proof of concept but make sure your analytics scale.
6. Make analytics repeatable without any discernable effort, otherwise it will not be done. This usually involves professional software packages, not Excel.
7. If your business is operating internationally, make sure your pricing analytics is too.
8. International analytics: make sure you can compare prices and discounts across borders but do not use it as an excuse to force changes to commercial terms on local markets (speak to Stratinis about how this can be achieved).
9. Use more than one pricing KPI. Pocket Price is important for assessing financial performance, but also use KPIs that are relevant for sales people and customers (who do not always look at Pocket Price).
10. Train and communicate internally: if your calculations (e.g. allocation of lump sums) become a black box you lose buy-in from the organization (read: sales) and you have not understood that pricing analytics is about sharing, not safeguarding.

5 Building Blocks for Giving Sales Bonuses on Price Performance

by Finn Helmo Hansen, Founder & CEO, Stratinis

B2B Pricing managers often complain that sales people  are not very good at pricing and that they must do better. While it should not stand alone, one tool to help with that is inclusion of price into bonuses.
1. As with anything that sales people are bonused on, it needs to matter. If it is either insignificant (price is one of 20 goals) or unachievable (you only get the bonus if you put through a pocket price increase of 50%) then they will of course not be motivated by it. Make it achievable and realistic, even if stretching for some of the sales team members.
2. Get senior management to support revenue/price-based bonus targets. It has the built-in advantage that price and profitability targets often go well with their own targets.
3. In pricing we often have several pricing/revenue key performance indicators, such as pocket price, pocket price increase, price index against competition, etc. While it can be tempting to include all these targets in some sort of basket of targets for the sales people to achieve, it also makes it difficult to understand and relate to in a negotiation situation. It is better for bonus purposes to have one single price KPI. You can have multiple KPIs that you communicate to the sales team, but only one should be bonus triggering (and with a discernible amount of money from it, see #1)
4. Some good KPIs for sales bonuses in B2B are:
  • Pocket Price: what do we make per unit at the end of the day.
  • Pocket Revenue: what do we get in at the of the day, multiplied by quantity, so not just focus on high price, low-volume items.
  • Pocket profitability: Takes into account that some products are more profitable than others.
  • Pocket revenue percentage change: still focuses on price and profit, but also pushes the sales people to do better.
  • Price performance against target prices: measure how well the sales person is doing against a set of target prices: below, on target or above.
5. Support everything you do with information and communication. Train the sales people not only what the bonus system is about, but how they can achieve it. Then they will see the light. Even ahead of bonus goals from other departments who haven’t communicated as well about their desired goals for their department.

To learn how Stratinis can help your business implement an effective pricing strategy and roll this out to your global sales teams, visit our website.