Using Pee Wee Soccer Techniques to Drive Pricing Change into the Sales Force
Posted by Tom Cowen on Tue, Aug 09, 2011 @ 11:13
As Business Lead of Vendavo's Profit Analyzer Center of Excellence (PA COE) and Coach of a U9 Boys Soccer team, I've come to realize I spend my time during the week and on weekends pretty similarly. Whether you are an 8-year-old soccer player or a seasoned sales veteran refocusing on pricing, the challenges are much the same. To my fellow pricing directors and youth soccer coaches around the world – you owe it to your players to help them solve the following basic challenges:
• Resist the Magnet – For millions, the image of every youth soccer player on the field standing within a 3-foot radius of the ball is indelibly etched in their minds. As coaches, we laugh at the magical magnet soccer ball that pulls every player on the field to it. Sales reps must fight another overwhelming force – the commission. While most youth soccer players are convinced that to get the ball is to succeed, many reps feel the fastest way to big commissions is to sacrifice price for quarter-end volume. Get the ball and get the deal…now!!!
Pulling away from the soccer ball “magnet” involves baby steps and proof of success. A coach who spreads the field and produces goals parallels a salesperson who finally gains the courage to ask for a 10% price increase and actually keeps the volume. The “aha” moments come quickly when the customer does not walk away. In Vendavo's PA COE, we see proof of this again and again.
In one recent example, a process manufacturing company Line of Business (LOB) lagged seriously on increasing price following large raw material cost increases. This LOB finally gained the courage to move away from the magnet and increase price. In two months, they have already increased margins 3.5%.
• Assemble Your Team and Defend Your Goal - It is vital for my players to learn their positions as a means of protecting the goal. Sales reps must also understand their positions to defend price. As the captain of both sales and pricing efforts, it is crucial to assemble the team that best defends the pricing “goal.” One of my former COO’s liked to joke that the best way to give away price was to call him in.
Conversely, one pricing director I know writes newsletters on raw materials and explains the impact of rising raws to top customers. Another pricing director leveraged Vendavo Large Account Playbooks to help his reps better understand large account dynamics. Knowing which large customers have the highest discounts, order more frequently, and adopt new products more quickly provides valuable information for upcoming negotiations. How would you like having those players defend your goal?
• Learn the Plays – Just as my players are developing their foot skills, they’re also practicing passing in triangles and running corner kick plays. So while sales reps need to refine their abilities to understand body language, they also need to practice their pricing plays.
In my early years as a global account manager covering a Fortune 10 company, I quickly learned my account’s play. They set up multiple layers and negotiated “a pound of flesh” at every single layer until the last day of the quarter. We quickly adjusted our plays to scale back our initial offer and withhold “final” concessions until the very end. Other customers deploy very different strategies which must be played differently.
• Watch the Greats – To help my soccer players appreciate the game, I encourage them to watch the greats, from Argentina’s Lionel Messi to the Women’s World Cup. The greats provide us with inspiration, ideas, skills, and motivation. In pricing, Warren Buffett looks to the greats. Here’s a quote from his recent Bloomberg1 interview:
"The single most important decision in evaluating a business is pricing power. If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business. And if you have to have a prayer session before raising the price by 10 percent, then you’ve got a terrible business. “
At Vendavo, we don’t have to look very far to see the pricing greats: Charlie Peters of Emerson Corporation and Martin Slark of Molex Corporation relentlessly drive pricing change deep within their organizations. In your own organization, you can find the reps with the highest price realization or price increase effectiveness and define them as greats. Put up examples that it can be done.
I wish you all good selling and good playing.
1 Frye, Andrew, and Dakin Campbell. "Buffett Says Pricing Power More Important Than Good Management - Bloomberg." Bloomberg - Business & Financial News, Breaking News Headlines. Web. 27 July 2011.