Sales & Marketing Management - September/October 2008 - (Page 29)

TRAVEL/MEETINGS INCENTIVES TECHNOLOGY TRAINING Banish the bottom-line blues With price optimization software, the only direction your profits can go is up D uring an economic slowdown, most B2B companies are content to do what they’ve always done— hunker down and start playing defense. They go into survival mode, pulling out all the stops to protect their market share and top-line revenues. And along the way, they hope that cost-cutting measures and efficiency improvements will somehow lessen the blow to their bottom line. Leading B2B companies have a very different perspective. They understand how efforts to improve efficiency can quickly reach a point of diminishing returns. They’re leery of gutting their core competencies and differentiating capabilities through cost reductions that cut too deep. They realize that aggressive discounting by salespeople in order to protect market share can easily wipe out gains in other areas, destroying their profitability and crippling their company’s long-term ability to compete. So how are visionary companies arming their sales force to grow profits and gain sustainable competitive advantages in the current economic climate? Better prices, not lower prices Many of these visionaries have now discovered the hidden opportunity presented by price optimization. Given the financial variables at play, pricing has a tremendous amount of leverage for B2B companies. Even relatively minor improvements to realized-price can have a major impact on profitability. In fact, many B2Bs have discovered the bottom-line impact of optimizing their prices and discounts dwarf those of cost reductions and volume increases combined. Price optimization technology leverages a company’s transactional data and combines it with statistical science and business application software to improve how companies set prices in market. At its core, price optimization measures opportunities to differentiate prices for individual sales transactions on the basis of their unique circumstances. The most obvious examples include deal size, customer and geography. The power of price optimization is that is also reveals additional opportunities hidden in the data to differentiate price www.salesandmarketingmanagement.com Greg Peters is CEO of Zilliant, Inc., an Austin, Tex.-based provider of price optimization software (www.zilliant.com). He can be reached via e-mail at greg.peters@zilliant.com or by calling 877-893-1085. istock photo; composite illustration by Beth Meyers including dominant product, end use and deal source. Prices are then delivered to the sales force as a “band” of price points—a start, target and ceiling—enabling them to negotiate with more confidence and consistency while maximizing prices and profits. Despite the underlying mathematical sophistication, the output of price optimization software is intuitive and simple for business users to understand and act upon. Price optimization has largely remained a hidden opportunity for many because, powerful though it is, pricing just doesn’t get much attention during a market upturn. In a positive market condition, the rising tide of growth covers a variety of “pricing sins” committed by salespeople, and their companies can get by with fairly rudimentary pricing practices across their thousands of products and customers. But when growth begins to stall, those inferior pricing practices become a major problem. All of the pricing guesswork, intuition and rules-of-thumb that seem sufficient in a growing market conspire to deprive B2B companies of margin dollars they so critically need in a down market. SEPTEMBER/OCTOBER 2008 SALES &MARKETING MANAGEMENT 29 http://www.zilliant.com http://www.salesandmarketingmanagement.com

Table of Contents Feed for the Digital Edition of Sales & Marketing Management - September/October 2008

Sales &�Marketing Management - September/October 2008 Contents Editor's Letter Brian Tracy University Smart Sales Sales Strategy Smart Marketing Marketing Strategy Smart Management Management Strategy The Low-Cost Sales Leader Why Sales Process Gets the Shaft Training Q&A Technology Making the Case for Travel (Part II) Travel/Meetings On the Road The Way I See It

Sales & Marketing Management - September/October 2008

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