Protect Yourself from Price Bullies

Remember the story of Charles Atlas, the strongman? Spoiler alert: Atlas wasn’t always a strongman. As a young teenager, Atlas was a skinny, sickly, “97-pound weakling” who was bullied and constantly beat up. When he turned 17, he tired of it. He developed his own fitness regimen, built up his body, and eventually became famous and rich from selling his fitness program around the world. He went from a scrawny weakling to a strongman.

Weak pricing power is common, and many organizations feel like the “Before” version of Atlas. They’re losing many orders on price because they haven’t created sufficient customer preference:

• How the company conducts marketing and sales “conversations” doesn’t lead prospects and customers to recognize the value the company creates for them.
• The company’s offering doesn’t create compellingly good value that’s matched to customer preferences.

Is your company a strongman? Or is it time to strengthen your pricing power?

Breaking out of a weak position won’t be quick or easy, but there are proven ways to do it.

Don’t forget that your company exists to create value for customers by satisfying their needs and wants. Done right, this approach yields good profits. Your company must make a healthy profit to attract the capital needed to sustain the enterprise and continue to be there for customers. So, how can you set up everything so customers will get the right value from you, making sure each relationship is mutually profitable?

Equip and train the sales team.

Put your sales team in a better power position. Equip them with a value story that connects with prospects’ and customers’ most pressing concerns (more on this later). Prepare the team to better understand and work the customers’ buying process to help them reach a well-informed decision on doing business with you. Teach the sales team how to prevent customers from making an incorrect decision because they didn’t understand how your business can make them better off. Don’t let your company’s true benefits and advantages go unrealized or unappreciated.

Find the right customer.

You can command the prices you deserve by focusing more on the “great fit customers.” These are the customers to whom you can bring compelling value and who are profitable for you. These are the companies that feel glad they found you or would have a real problem filling the value void if your company disappeared.

Think about your existing customers and make a three-column list, putting each customer into one of three categories, as shown below.

• Great Fit Customers
• Not-So-Good but Salvageable
• Should We Fire Them?

Now, how is your list weighted? Evenly dispersed across all three categories? Heavily weighted to the great fit customers? More likely than not, your list will be weighted toward the not-so-good and fire-them columns. If that’s the case, then you will need a fix plan and a prospect development effort to improve your future customer mix.

Marketing has the primary responsibility to segment the market and define the types of customers to go after. Then it is the sales team’s job to make contact and ask questions to qualify the prospective customer as a fit for your company’s way of doing business, offer bundles, set and manage expectations, understand your company’s profit equation, gather the info needed to configure and deliver the right solution, and persuasively move the prospect through the decision process.

Influence who’s involved in the customer’s decision process.

In business-to-business sales, it’s unlikely that only one person is responsible for decision making. A customer as a company may care about a worth-based selling proposition, but not every individual in that company will care. You have to reach multiple people and roles to communicate the worth of what you bring to the full audience at the customer’s organization, not just to the person who says, “I am the decision maker.”

Multiple functions and individuals within the customer organization may be involved in the buying group that makes a purchase decision. They’ll play different roles and typically have different rational motivators. For example, marketing folks will generally prioritize revenue or margin growth, and operations folks will likely value practicality, dependability, and quality.

By involving individuals and functions that care about aspects of value other than just price, you’ll have better choices than just caving in or walking away.

Influence the perceptions of your role and your worth.

In order to place greater emphasis on the value to the customer in your pricing, it’s necessary to weaken or break the anchoring of customer price expectations. Comparative pricing—your past prices and competitors’ prices—is often that anchor point. It’s common that the customer perceives your offering as having parity with that of competitors or believes it needs to be within a certain percentage of competitors’ prices. When prospects can’t see more value, they won’t pay more and choose you.

I’ll bet that your company does something special and valuable for customers. The problem is you aren’t getting credit for it from all your customers and prospects. Instead, you get pounded on price by buyers who don’t seem to understand the value of doing business with you.

You have to change the customer’s frame of reference so that you don’t look like everyone else. If the basis of competition is “a product at a price,” change the conversation to “value for the customer’s money.”

I explain how to do that in my recent article, 5 Ways to Fight Off a Price Squeeze. In this free article, you’ll find:

• why customers and prospects aren’t giving you credit for your real value,
• how to connect with what they want and need most, and
• a three-step outline for getting your value recognized.

Bob Sherlock