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Pricing’s secret weapon: a well-trained sales force | McKinsey on Marketing & Sales

Imagine you supply soup. You sell millions of tins of soup to thousands of supermarkets across a vast set of regions. Having a single price for each tin of soup you supply would certainly make life easier, but you would also be missing out on massive potential profits.

This example may oversimplify the point, but it brings out in sharp relief a fundamental pricing issue across B2B markets today: Companies do not price their products in a way that reflects the value of the product in each local environment. To do so requires a number of capabilities, but one that is often overlooked is a fundamental and sustained change in the mindset of the sales force (yes, the sales force, not just the pricing team). We have found that turning your sales force into a pricing powerhouse leads to a 2-5 percent additional return on sales.

Powering up the sales force
Most B2B companies have a pricing team, but few elevate the function to a high level of excellence. This group often performs an array of important but basic functions, from capturing pricing intelligence to providing pricing guidance on new products to providing analysis of competitor negotiations. That’s a good start, but in our experience, it’s not enough. Because their teams don’t have the necessary capabilities, companies are still missing substantial opportunities to adjust prices and increase profitability.

Really successful companies empower their sales force with the right tools and capabilities to get better prices. In many cases, this kind of support leads to sales reps attaining higher prices than those imposed from above, because they know the customers and have a better sense of the local competitive situations and opportunities. Sales reps at a large engine-manufacturing company, for example, identified a potential price increase of 6 percent over two years—well above the 2 percent target set centrally.

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Pricing’s secret weapon: a well-trained sales force.

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