OK, I get it. In rapidly growing markets, it's worth it to discount your products and services, in order to establish and expand your footprint. The high-tech guys have known this for years and use that strategy quite effectively.
Topics: Negotiating with Backbone
Recently, we've seen a number of negotiators get taken to the cleaners in business and politics when they just didn't know how to deal with a bully. You know who they are: they yell and scream at you, pounding the table throughout the process. Think about the current trade negotiations with China—the same thing happens in business all the time.
In an article published recently in the “Technology” section of The Wall Street Journal, the author, Jack Nicas, alluded to pricing excellence in the three giants of U.S. and global technology: Apple, Google, and Amazon. Here are the results of the last quarter:
Over the past year, I have noticed an increase in "scorched earth" negotiating tactics. These are tactics which move beyond "going kamikaze" that I talk about in Negotiating with Backbone. This new tactic indicates that the other party is going to angrily walk away from the deal and hurt each of the parties in doing so. Here's what I have learned: so far in every case, while it is an escalation of normal poker playing, it is still just a tactic to get a discount.
We've had a lot of discussions on leadership lately. They tend to focus on people not characteristics. You know the drill, this person is a great leader and this one isn't.
The purpose of "big data" is to give managers a clearer vision of something so they can make decisions about products, pricing and distribution. In pricing, it is generally around how customers buy. It uses statistical techniques to group customers into definable segments and helps you figure out how to sell to those segments.
Over the years, we've done some pretty sophisticated analysis - customer profitability, segments, buying intent, and what it's like to work with them. But being in my KISS mode today, I’d like to share a story from some work we did in the transportation industry
We were interviewing a freight terminal manager, and he was discussing the different types of freight they handled. His statement to us was: "Listen, we have two types of freight, green and brown. The green freight is stackable and easy to handle, the brown isn't." We used that simple statement as the basis of the price strategy where the green freight was priced lower and the brown freight priced higher, and it worked quite well.
Think about how this ties to customers. Replace the word “freight” for “customer” – green customers and brown customers.
Lately, we've had a lot of conversations with businesses that are ramping up "strategic pricing". They've adopted more systematic approaches to pricing and have taken responsibility for setting prices away from salespeople. This transitions price away from the team worried about closing a sale to specialized pricing people who are worried about generating profits that meet company goals. That's terrific. Well, it might be terrific for some, but it's not terrific for the sales force that is struggling with this new pressure and, like many sales forces, now calls the pricing people the "sales prevention" department.
Topics: Selling with Confidence