Scrap the notion that you can keep business as usual. B2B leaders and sales and marketing teams across the globe are finding ways to adapt in this time of crisis. As businesses assess the state of their industries, they are finding ways to move forward in an era where the new normal is anything but.
I’ve been talking to leaders in industries far and wide, from manufacturing, distribution, chemicals processing, tech, pharma and more. We can see the echoes of this time and the 2008 recession and also know that this is a time for everyone to reevaluate everything, from how they market their brand, to pivoting their business (if they can and if needed), how to sell, how to price their products and services, and much more. Businesses walk a fine line when they continue on these days; one move in the wrong direction, a new sales strategy, or one price hike, or price discount can move you forward or set you back.
As the business world navigates this jagged path, I’ve gathered insights and learnings from experts and industry leaders on where to go from here.
Take a step back and reevaluate
It is essential to realistically assess the state of your industry. Ideally, you can retain the pricing structure you have set in place and see profitability in the black and hopefully you can return to prior levels of normalcy. The priority is to think about now and adjust so you can pay the bills is job-one, but not at the expense of future growth or profits.
Keep prices stable and rational by being fiscally attentive and mindful of the entire chain.
Companies should seek to keep prices stable as much as possible in their own industries. Raw material and logistics cost increases and decreases will impact most manufacturers and distributors, transparency and rational price moves build trust in customers to accept corresponding price changes.
Uncertainty and mistrust will delay those purchases and slow the recovery. The “we’re in this together” slogan is true, especially with your most valued customers.
If you know your customers well and you have a partnership, then there should be mutual transparency. They need to involve you in their plan moving forward. How you fit into that plan should be spelled out clearly all the way through to an endgame. Your decision to detour from your existing pricing model needs high levels of accountability.
Be careful and considerate
On the topic of stocking up, be careful about suggesting things that could rob your company of sales and earnings in future periods. This quarter is impacted but don’t undermine future quarters to fill a short-term gap.
Legitimately try to help customers manage their way through current market conditions. It is crucial to keep customers informed of your production and product availability. It is fine to suggest customers increase their orders to protect their workflow and supply as long as you don’t use this as a ‘grab’ to pull ahead additional business.
Customers are cutting projects but that can give you an opportunity to rethink strategy.
COVID-19 is changing the game
The pandemic is forcing the hand of stakeholders to get moving on certain projects, while slowing down other projects because of resource constraints. You will need to redirect your focus on other aspects of the business.
You can provide differentiation in your customers’ eyes: flexible, more frequent, free delivery, product trial, easy payment, and more. Whatever makes the customer the most comfortable builds loyalty. Talk to them, find out what it is, and react accordingly.
While you think and act on the urgency of now, don’t forget about the long-term plan.
Provide a specially priced offer, limited time separate from other products and services. This strategy protects your brand while making it clear that you are reaching out to customers in tough times. Although profit margins are lower, some companies are seeing an increase in sales and installations after offering less-expensive items that still fit into their brand. This is no small feat in a recession.
Communicate with customers, both internal and external, as well as prospective customers to gage their plans. Any post-crisis pricing should really fit within the structure that was in play prior to the crisis. Most companies are profitable, successful and have gained market share based on their business model. Unless there is a significant shift in how you see yourself after things have gone back to normal, continue on the plan that made your company what it is today.
Gabriel Smith is the chief evangelist and vice president of innovation at Pricefx, providers of pricing optimization software. He has 20 years of experience in quote to cash, CPQ, pricing, promotions, consulting, product management, sales and general management.
Read our special report on Pricing In a Pandemic.
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