Should I let my son sleep a little longer than usual, push him to eat more breakfast, or cram in a few minutes of reading? As a parent, these are the questions (amongst others) I wake up with. To answer them I rely on gut and spousal guidance, but frequently feel like I made the wrong choice. If only I could start my day with a readout from a dynamic dashboard that could highlight “red” areas (e.g.,”warning your son will not have enough energy to learn anything today”) and change trajectory based on past decisions (e.g. “your son is on a path to be an 11% better person because you shared a story about how to be a good friend”). Unfortunately, I don’t have this type of dashboard for my personal life, but I do for my day job as a Salesforce Pricing Strategist.
Although pricing can be as much art as science, I believe I’m speaking for all pricers when I say “we could always use more data.” We need more data to improve decision making, prioritize time, measure our impact, and capture feedback. With my colleague, Yang Xu, we actively address this need at Salesforce and I’d like to share some of our learnings and best practices.
1. Drive the right sales behavior
Without appropriate guidance, your sales team will likely rely on their most recent experiences and/or their gut. Yet imagine if you arm your salespeople with data from your top sellers’ historical pricing information. Providing price guidance to the field embedded in the sales process can drive a 3-8% profit margin uplift, all without additional product investment. Yet, most companies have underinvested here and we’ve found that over 60% of our customers don’t use more than a discount matrix to guide deal pricing (finding based on internal Salesforce customer survey). But how do we provide that rich guidance to sales you ask? Fortunately, those with Salesforce CPQ+ will be able to create guidance based on historical data with just a couple of clicks and expose this guidance where Salespeople need it the most (within the quoting process). Watch a demo of Einstein pricing guidance now!
2. Define key metrics and monitor for improvements
Design 3-5 key metrics that will enable a pricing strategist and/or business owner to quickly determine if there’s an opportunity to better monetize. Key metrics could span sales friction, list price, price perception, packaging, and discounting behavior, among other factors. For instance, we constantly monitor low quantity deal proximity to list price. If too few deals are near our list price, we may have set it too high or are not clear on communicating product value. But remember that benchmarking the pricing and sales performance of one product against a comparable product may be meaningless. Inevitably deeper analysis is required to determine the health of a product’s price. However, these metrics will enable rapid and consistent proactive opportunity identification.
3. Set ongoing pricing reviews
Set a cadence with stakeholders to use agreed-upon metrics to drive business decisions and prioritize projects. These pricing reviews can be a useful tool to determine both what you will and won’t do. Keep in mind that these metrics dashboards will continue to evolve as you adjust over time, but they ensure the balance against simplicity and enable deeper ad-hoc analysis when an opportunity is highlighted.
As you can see, price health is a complicated topic that requires the right field behavior, quality data, and consistent monitoring. With these ongoing price reviews, you’ll be able to prioritize your time on the skus/monetization opportunities that need the most attention. Unfortunately, this won’t help me evaluate the breakfast versus sleep trade-off.
Thank you to my colleague, Yang Xu, who led the effort to define pricing metrics and build dashboards, as well as generously provided insights and suggestions for this article. His partnership and contributions in shaping solutions are invaluable.