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Many distributors face the challenge of their customers shopping around to get the best price. This is especially true when it comes to near-commodities. However, what companies don’t know is that customers also shop for the best price among your employees which can often lead to a decrease in potential revenue.
The biggest challenge is identifying when a customer is price shopping within your company. Sometimes it can be hard to tell when it is happening and even harder to stop it.
Let’s look back on a post from our partner, Mark Tomalonis with WarehouseTWO, as he explored how you can spot and stop internal price shopping.
Not maintaining control of your customer pricing can have a significant impact on your business. This is especially true when it comes to profits. If you have a salesperson who is routinely offering lower rates than others on the sales team, then that can quickly lead to diminished profits. Here is a simple test you can conduct to see if you have a problem with sales pricing discipline in your company.
Individually, ask each of your employees whose job it is to handle customer inquiries and orders and what they would charge a new customer for a specific quantity of a specific item. If you notice that all of your salespeople did not give the same answer, then you have a pricing problem.
Without "sales pricing discipline" within your company, your customers may be taking advantage of your team. Here are two of the most common tactics used by customers to get a lower price:
Asking for a better price. Anyone who has been in business longer than a day knows that a potential customer is going to ask for a better price. However, there are ways around just passing out lower rates. Try one of the following techniques or combine a couple the next time someone asks for a better rate:
Referring to Historical Pricing. Selling to businesses is a little trickier than selling to consumers. For one thing, most B2B customers will know exactly what they paid for every item they have ever bought from you.
Which means that they will expect to pay the same price they did the last time they bought the item from you. Many customers understand that price increases are a natural part of doing business, but they will still attempt to get a lower rate from you. Simply apologize and politely say no, most customers won’t push back and typically agree to the new price or will negotiate.
Here are few suggested actions to get better control of customer sales pricing at your company:
We understand the challenges that distributors face, including internal issues like sales pricing disciple. Our TrulinX ERP system helps you track and maintain your pricing integrity for all the products you sell. To learn more about the TrulinX software or to speak with one of our team members, give us a call today at 800-874-2883 or contact us directly.
WarehouseTWO, LLC is an independent “inventory-sharing” software tool created exclusively for durable goods manufacturers and their authorized distributors, and for any group of durable goods “peer” wholesaler-distributors, such as members of a buying/marketing group or cooperative. To learn how inventory-sharing with WarehouseTWO can help your business, visit the WarehouseTWO website, or email info@warehousetwo.com.
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