Often a salesperson's information on market pricing comes from a small percentage of his overall customer base – and often that competitive intelligence comes from customers who are not in the same customer segment or size range. By using technology, fresh, actionable market pricing information can be unlocked from distributors' data, and turned into valuable knowledge the sales force and managers can use, according to Brent Grover in Conditions Ripe for Better Pricing.
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"The heart and soul of strategic pricing is putting analytics to work on the distributor's transaction database," Grover says. "What's going on here is taking the most recent 12 months of transactions – every customer, every item – and sorting the data. Segmenting customers, segmenting products, identifying customer pricing sensitivity and levels of resistance."
Relying solely on the salesperson's instincts about pricing leads to inconsistent and unsatisfactory results. In research for a book, Grover found that the more autonomy salespeople had, the less satisfied management was with the results. And the more autonomous salespeople were, the less profitable the company was. Providing your sales team with the right technology – which may simply mean using more of the functionality in your current ERP system – will provide better guidance and allow them to approach pricing more strategically.
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