by tradespeopleinsights | Jan 13, 2016 | Uncategorized
This post originally appeared on INSIGHT2PROFIT.com
It’s a common knee-jerk reaction for salespeople to focus on increasing volume by offering discounts on every sale – even if it means sacrificing margins. One way to mitigate the risk of excessive discounting is to establish a pricing system that balances volume incentives with well-defined boundaries that sales staff must operate within.
Ideally, in an effective pricing system, the framework should provide guidance for as many as 80 percent of sales. This guidance should consider a comprehensive range of factors, including the type and size of the customer, the market and the nature of the opportunity. The direction should be clear and unequivocal, providing sales staff with “guardrails” that establish minimum and maximum prices or margins. Sales staff can bounce between these guardrails as appropriate, but they should not be allowed to go above or below the established boundaries.
For the other 20 percent of sales, be prepared to manage the pricing exceptions. For these outliers, the framework allows pricing managers to enter the conversation and work with the sales staff and perhaps even the financial team to develop a strategic price appropriate for a specific situation.
By limiting exceptions to no more than 20 percent of the time, you’ll be able to equalize the competing interests of volume versus margin far better than a one-size-fits-all pricing system. Sales staff will still have the flexibility to manage the majority of sales on their own, allowing them to meet the needs of specific customers as well as their own particular quota goals. But the boundaries you set will prevent those individual goals from overriding your company’s high-level goals.
Every business is different, so the 80/20 framework that’s right for your organization will depend on the type of selling you do. If your business is list-price driven, your pricing system may be able to accommodate higher volume incentives. If you’re in a business where price is highly customized, then your framework may need a more aggressive margin component. Implementing this system may take some time, as well. Achieving the right balance of guidance and exceptions is a process that often requires fine tuning. It also requires an extensive amount of data and knowledge in order to put together a sustainable system that produces actionable, accurate and real-time insights.
Whatever the framework you decide upon, the 80/20 structure will provide sales staff with the latitude they desire, while protecting the profit margins your organization needs.
For more details on how to develop guard rails for your team and establish an 80/20 structure, check out this article.
by tradespeopleinsights | Jan 12, 2016 | Marketing Trends
By Rachel Kerstetter, PR Architect
We’ve closed the books on 2015 and 2016 is already off to a great start. If you haven’t already, now is a great time to evaluate what worked well and what didn’t work for you in 2015 to calibrate your 2016 efforts.
The most popular Tradesmen Insights posts of 2015 give us an idea of what content proved valuable enough to you to keep coming back and to share. Our top posts from last year represent many trends and challenges that aren’t going away.
Here were our top 10 posts published in 2015:
- Are you a strategic or tactical thinker?
- For Your Lead Nurturing Programs – Where do you Find Good Content?
- Why Forecasting and Budgeting are Vital to Success
- What is a creative brief?
- Did Your Website Survive Mobilegeddon?
- B2B Social Media Marketing: 5 Reasons Companies Skip Social Media And Why They’re Wrong
- What Will our B-to-B Marketing Responsibilities Look Like in 2 Years?
- What’s the Future of Small Independent Industrial Distributors?
- New Content Marketing Research for Manufacturing
- Listen…Please
Planning, strategy, content marketing, listening and adapting with the ever-changing algorithms that rule the web remain important issues into this year.
Since we started Tradesmen Insights many years ago, it’s undergone some changes, but the goal is still the same: to provide valuable B2T marketing communications information, advice and guidance.
What do you expect to be the top issues you’ll face in this year?
by tradespeopleinsights | Jan 6, 2016 | Marketing Tips, Marketing Trends
Desktop opens are still more than mobile, but the trend is closing the gap according to a recent post in emarketer.com.
Mobile click-through rates for U.S. marketing emails sent by Yesmail clients in the later part of 2015 were up close to 14%.
So what does this mean for manufacturers that are trying to reach contractors and tradesman? It means that whatever you’re trying to communicate to them, it needs to be mobile friendly. Contractors check more than emails on job sites, and the more mobile friendly you are, the better results there will be.
Besides the content they want to deliver, they need to consider apps and mobile tactics. Here are a few.
Possible Apps to Consider:
- Product information
- Engineering or other calculators
- Installation and troubleshooting instruction videos
- Productivity tools
- Competitive cross-reference charts
- Ability to check current inventory levels
- Distributor locator with direct links
If you like this post, you may want to read:
Are you using mobile to share your content with tradesman and contractors.
2016 Budget: How much are you going to spend on social media and mobile marketing?
by tradespeopleinsights | Jan 5, 2016 | Public Relations
By Rachel Kerstetter, PR Architect, Sonnhalter
Sometimes I get scared that others in the industry don’t know what PR actually is or stands for. The textbook definition of PR is simply put as Public Relations, the way that you communicate (relate) with your audiences (publics).
For 2016, I challenge you to think of PR differently than ever before. Banish words like “spin” or “promote” and instead think about PR as Performance, then Recognition.
Meaning, your organization needs to perform, do something, before seeking recognition or media coverage. The articles that practitioners like myself get for your company is called earned media, the “earned” part is very important. PR Pros can help you identify recognition-worthy aspects of your company, but we can’t create it for you out of thin air.
As you go about your business this year think about the cool things your company does, such as launching a product, breaking a world record or being the first to provide a service that adds value, and recognize that these are opportunities to communicate with your audiences.
PR is more than just getting headlines, it’s telling the stories of your company. Make 2016 a year of action stories for your public relations team to tell. Doing this will help you build your organization’s credibility in 2016.
by tradespeopleinsights | Dec 23, 2015 | Events/Trade Shows, Uncategorized
We’ll be taking some time off and will be back after the first of the year. Enjoy the Holidays with your Family.
by tradespeopleinsights | Dec 16, 2015 | Uncategorized
This post originally appeared on INSIGHT2PROFIT.com
Pricing data can be dense. If no one is reviewing it, managing it, comparing it or scrutinizing it, it’s likely your organization is missing price leaks you could otherwise put a stop to. From volume discounts to price overrides, profits are lost and margins are cut, but do you know by how much? Can you identify your true pocket price for your top selling products?
If not, you may have a data visualization problem. But like any problem, a solution exists, you just have to seek it out. Here are four ways to gain better visualization into your organization’s pricing data.
1. Establish Pricing Ownership:
In most manufacturing businesses, pricing is a responsibility divided amongst marketing, sales, finance, product teams and other executives. But whose job is it to see the big picture? If you can’t validate hiring a pricing manager, you can develop a Pricing Ownership Matrix.
In a decentralized customer environment where no pricing leader is appointed, you can define pricing area ownership. Consider catalog and list pricing, discounting, key accounts, geography and business divisions.
Then ensure these “area owners” meet often to talk about the big picture of pricing.
2. Search Out Discounting Visibility:
Do you know how many discounts your sales team is offering? How about your customer service team? From freight and volume discounts to rebates and “long-time customer” pricing, the hits to your margins add up.
Obtaining clear visibility to your discounting structure through a Pricing Waterfall is a powerful way to determine pricing leaks and non-value added discounts. Discover how to determine your true pocket price in the this 1-minute video.
3. Determine Product Value:
Your organization deserves to be paid for the value it creates. But do you know which products create the most value for your company?
Most businesses focus on getting the price they set for each product, but are often disappointed when customers won’t agree to it. More important than “getting the price” is balancing what the right price is.
Some products won’t create a lot of value for the brand—perhaps they are not differentiated enough when compared to the competition. Those products will fetch a lower margin. Other products may create a lot of value; they may be highly differentiated or solve a problem your competitors can’t. Higher margins can be sustained, bringing in higher revenues.
Once you determine and utilize this information, your pricing strategy can become far more sophisticated.
4. Utilize Technology:
If you are using an outdated ERP system or BI tool, you may not be seeing the entire pricing picture. While you can track list price and invoice price, what about analyzing pricing and mix analysis? Without actionable information from your tools, how will you identify outliers, see pricing variations among peer groups or be immediately alerted to pricing variances?
While there is power in your data, you must utilize the proper pricing application to discover that power. To truly visualize your pricing data in the most efficient manner, you need a pricing application that can stop price leaks before they become dangerous to your bottom line, predict customer churn and identify the root causes of profitability issues.
The Bottom Line
By establishing pricing ownership, seeking discount visibility, determining product value and utilizing technology, you can gain the pricing data visualization you truly need. In fact, one manufacturer worked with INSIGHT2PROFIT to gain better visualization and was able to realize an additional $2.3 million in revenue over 16 months. Learn more in our case study.
