What Are the Best B2B eCommerce Pricing Strategies in an Era of Digital Dominance?
“By the end of 2021, digital commerce is expected to overtake direct sales as the most used channel for B2B selling … it is likely that B2B sales will become ‘digital-first’ around the end of 2021.”
- Mark Lewis, Increase Profits and Delight Buyers by Becoming a Digital-First, Omnichannel B2B Seller, Gartner
It’s clear that digital commerce is reaching a critical mass. Seeing it laid out in such stark terms, as the results of the recent Gartner survey shown above, certainly solidifies the imperative. For pricing teams, the implications are clear. Every B2B pricing strategy must include eCommerce channels.
When deciding how they are going to set eCommerce prices online, companies must look to customer experience as their North Star. B2B customers expect self-service, transparency, and consistency across channels. Hence, each price presented online must make sense for each specific customer relationship and/or the context of the order in progress, and it must be consistent or intentionally differentiated with pricing in other channels and often needs to be dynamic.
What Price Do I Show Online?
Determining the right price to show online is a tricky proposition indeed. In traditional channels, the sales rep can offer better pricing on the spot when customers are dissatisfied. The digital channel removes the salesperson filter, and by doing so, risks losing sales when prices are misaligned with customer expectations. A majority of the prices available to B2B customers online are non-negotiated or previously agreed upon, but in advanced dynamic price optimization and management use cases, automated negotiation is available to buyers.
Regardless, the initial online pricing that is made available to customers for a given product is critical to winning business. In the case of existing customers, a lack of market-aligned pricing means they must call in to place an order, thus negating the purpose of the digital channel. In the case of new customers, eCommerce has presented unprecedented price transparency in B2B, and too-high pricing can result in an immediate bounce to lower-price competitors online.
Determining the right price to present hinges on several key questions, many of which are unique to B2B. Specifically:
- Is this a known customer with a pre-negotiated price?
- Is this a new, unknown customer on the open web?
- If a known customer, is this new or existing business?
- Are the prices aligned to what salespeople are quoting?
- If online customers call sales reps for a quote, will pricing be aligned?
- Can customers counter pricing online? Can price negotiations be automated?
- If my costs change daily, can I update pricing immediately across systems?
- Do I have the right technology architecture in place to calculate and deliver the appropriate price in real time?
The right B2B eCommerce pricing strategy answers all of these questions simultaneously so that various customers’ needs are met. In addition to determining what price to show in different scenarios, getting pricing right in the digital channel requires the execution of a complex price build of fees and taxes or discounts based on a set of well-defined price rules within a pricing engine to arrive at the final price. Layer in the need to update pricing as quickly as the market, competition, inventory levels, or other factors necessitate, and the complexity can quickly overwhelm any pricing team with only manual tools at their disposal.
How Do I Keep Up with eCommerce Volume?
Those who embark on the eCommerce path quickly learn that requests back to their pricing system of record increase exponentially. Not only does a higher quote volume tax the pricing engine, online buyers’ baked-in expectation for instant pricing further overheats the system. It’s not uncommon for the digital channel to request tens of thousands of prices per day from the pricing system of record. Additionally, complexities such as competitor price comparisons or current inventory levels cannot be factored into pricing decisions quickly enough to produce consistently rational and competitive prices.
Simply put, most B2B companies are not equipped to dynamically service all requests coming in from eCommerce on top of other applications like CPQ and CRM. They need a real-time pricing engine that can house its pricing logic, calculate complex calculations, and easily scale to the high volume of pricing calls that the digital channel requires.
More Data = More Opportunities to Capitalize
eCommerce also produces incredible opportunity based on exciting new data sets that pricing teams can now capitalize on. This valuable data is unique to online customer interaction and can be used to better inform pricing strategies and deliver personalized pricing via the eCommerce channel. Some of these data points include:
- Cart abandonment: Incorporate an eCommerce-specific discount or other promotion to motivate completion of a transaction in the online cart or trigger a follow-up action for sales
- Pageviews: For pages with many views and a high bounce rate, does the price need to be better aligned to expectations?
- Conversions: What are your hot spots, and is conversion aligning to that attention?
- Inventory availability: Can a targeted discounting strategy help move inventory?
Each of these data points can be used to set multiple pricing strategies online. B2B companies must be able to dynamically adjust prices based on data insights in real-time. With the help of price optimization and management software, it’s possible to deploy a number of advanced pricing strategies online, including:
- Differentiate pricing for existing customers and new visitors at the product or SKU level
- Set eCommerce-specific discounts that can be personalized (or targeted) to customer segments and product groups
- Offer customer-specific agreement prices and dynamic tiered pricing for quantity breaks online
Intelligence and data science must be embedded into eCommerce sites and coupled with a flexible price management tool in the background that can automate price adjustments based on pre-determined rules. As an example, high inventory and pageviews with low conversion might indicate price is too high compared to online competitors. A targeted discount can be applied in Zilliant Price Manager™ and updated instantaneously in your eCommerce site with the Real-Time Pricing Engine™, a robust REST-based API, while maintaining consistency across channels.
Ensuring eCommerce Prices are Consistent with Other Channels
Never mind the future, the present is omnichannel. B2B buyers interact with their vendors over multiple channels and may even conduct a single transaction over more than one sales channel. As Gartner tells it, only a “seamless omnichannel experience … enables the customer to choose the channel of interaction and receive a consistent experience without having to repeatedly reestablish the context of the deal.”
With that said, how do you prevent your sales reps from quoting a price that is at odds with what your customer saw on your web site, and vice versa? For most B2B companies that have entered the digital age incrementally, eCommerce prices are updated independently of the rest of the business. In an omnichannel world, this process becomes untenable. Instead, pricing teams need a centralized application from which to make price changes that are then fed to all channels uniformly, in real time. The combination of a cloud-native price management application like Price Manager and a robust, REST-based API service like Real-Time Pricing Engine is the only way to achieve this feat while ensuring your prices remain rational.
Companies can set and update pricing strategies in Price Manager, while the Real-Time Pricing Engine performs complex calculations and data lookups in milliseconds. Consistent, relevant and strategy-aligned prices can now be delivered to eCommerce at the same time they are published in CPQ, CRM or any other commercial system.
Boost eCommerce Experience with Relevant Product and Price Recommendations
One of the reasons traditional B2B companies have been slow to embrace digital commerce is the concern that it lacks the personal touch that had driven product sales for decades. We have already covered how personalized, consistent pricing can be achieved via eCommerce, but it’s also important to automate the delivery of highly relevant product recommendations online.
Recommendations driven by machine learning can increase the value of every digital customer interaction. Based on the items currently in a customer’s cart, AI can deliver highly relevant product recommendations and customer-specific discount opportunities to grow the size of every online order.
Advanced Use Case – Automated Negotiation
Some companies have taken the concept of B2B eCommerce pricing to the next level by automating negotiation processes through a digital customer portal. The traditional process of requesting a discount from a sales rep, and that rep going back to get approval or counter-negotiation guidance is extremely high-touch. It’s time-consuming for the seller and inconvenient for the buyer. Customers now prefer self-service wherever possible.
Thus, automating pricing and negotiation is now a competitive differentiator – if you don’t offer it, your buyers will find someone who does. This automated process streamlines the negotiation step through dynamic pricing software and a real-time pricing engine. The ability to do this at scale changes the equation for sales operations and pricing teams. It’s possible to ensure more than 80 percent of quotes don’t require human review, allowing teams to spend more time on bigger, strategic deals. Plus, creating a responsive experience for customers on digital platforms, in which you don’t lose the ability to negotiate, converse and counteroffer, accelerates customer satisfaction.
The way this works is by executing on pre-defined parameters of what prices can be auto-approved without human intervention. This gives sales reps, distributors, partner resellers and customers the flexibility to negotiate within a range of prices that still maintains necessary margin levels and escalates customer counter-negotiations quickly and efficiently when needed.
The best way to consistently execute automated negotiation at the scale and speed users require is with a dedicated real-time pricing engine. B2B pricing complexity is too intense to rely on anything less. The pricing engine can perform lookups and complex calculations automatically.
The new status quo in B2B is omnichannel, which requires thorough yet targeted and highly nuanced omnichannel B2B pricing strategies. However, just because digital sales are now eclipsing traditional channels, it doesn’t mean all pricing efforts should be focused on eCommerce at the expense of everything else. Omnichannel pricing means consistency, transparency and market alignment wherever a customer encounters your prices.
The next-gen tools are available to B2B companies to power intelligent eCommerce. Contact Zilliant today to learn more.