In this episode of B2B Reimagined, two pricing industry veterans have a lively chat about how companies can best react to the harsh market realities driven by COVID-19. Zilliant Chief Marketing Officer Lindsay Duran welcomed Lydia DiLiello, founder of Capital Pricing Consultants, in for a wide-ranging conversation on the do’s and don’ts of pricing in a downturn.
One of the dangers in times like these are panicky, knee-jerk discounting responses. DiLiello has been telling clients that blind discounting represents the worst possible scenario because it tells the market that your value is not what it was previous to the pandemic. No one wins in a price war, and once those prices go down, there’s no easy way to bring them back up. While there may be micro-segments where a price decrease is indeed necessary, it’s important to be surgical in your efforts. This means understanding price elasticity to drive informed decisions about where and when to adjust price.
If a new pricing strategy is required, you must change your value proposition and impose guidelines to protect yourself against a long-term loss. For instance, you may determine through scientifically derived price guidance that you can lower price in a segment while still maintaining acceptable margin. Get the customer to commit via contract to that price at a certain volume guarantee. If the volume isn’t achieved, your price reverts back to the previously negotiated value.
Duran and DiLiello also touched on:
- The importance of carefully managing customer-specific agreement prices, ensuring sales reps aren’t overriding the negotiated prices.
- Why companies that have invested in pricing technology, processes and people are positioned to come out of the crisis much stronger than those that haven’t.
- How to price with empathy now while managing a strategy for the medium- and long-term recovery.
- Best practices for pricing teams, regardless of what the market is doing.
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