The five price pressures on B2B manufacturing and distribution sales teams
We all know that B2B sales are tough at the best of times. With the current rise in COGS that pressure is only getting worse by the day. So, what can sales teams and customers do about it and raise the bar (along with ASP and margins!!).
All business leaders know winning new customers is more costly than retention but still we mostly incentivise sales to win, win, win instead of keep, keep, keep.
Cross selling (or the lack of)
B2B sales often don’t have the time to really build a wide network within all parts of their customers’ business, so most often fail to really grow ‘share of wallet’.
Misaligned market pricing
Many wholesale distribution companies fall into this trap. When systems are simplified to standardise margins and/or discounts, ‘Cost to Serve’ must be reflected in the price.
Inefficient pricing activities
This is surprisingly common. Far too many companies rely on a single person to analyse pricing and recommend changes. Often this process of analysis, recommendation, feedback, review and action is extremely slow and inefficient, resulting in more margin opportunities lost to delay, and errors from multiple incidents of manual handling.
A business generating 35% on sales, will need to increase selling price by 3% just to maintain the value of gross margin, for every 5% increase in COGS.