When you sell through partners you can incrementally become blind to the street price of your products and services. Stripping away the blindness is a fast way to increase revenue.

You’re Blind and You Have a Problem

 

When you sell entirely through indirect channels you are blind to the street price and how your products or service is valued by the end customer.  The gap between the price you sell to your partner and the price paid by the end customer is clouded in several layers of bundling, value adds, discounts and other items.  To maximize your revenue, you need to peel back these layers.

 

Download the Street Price Tool to discover possible areas of blindness when selling through partners, learn how to address these areas of blindness, and see what types of results you can expect if the necessary and proper changes are made.

 

What Can Blind You to When It Comes Price and Channel Partners?

 

5 key inputs are required to price correctly and maximize revenue. When selling through a channel you are blind to only a few of these if you are lucky.  Some clients are blind to them all!

 

  1. Street Price: Actual price the end customer or user paid for your product or service

     

  2. List Price: The original price your partner shared with the end customer

     

  3. Willingness to Pay: Price the end customer would have paid

     

  4. Customer Value Perception: The value perceived by the customer from your product or service

     

  5. Total Value to Customer: Total ROI or actual value received by the end customer

     

For more on how correctly pricing can result in various improvements in your business, read our article titled, “How Can the Discipline of Pricing Drive Improvement for Business Services Firms?

 

The reasons for the blindness are numerous.  One thing we know is you did not plan on being in this situation.  The blindness occurred over time as partners were added, programs launched and complexity grew as a result.  To begin to peel away the layers clouding your view, you must understand how you arrived at this situation.

 

To examine this, we can look at the 5 elements from above.

 

Items your partners can help you address:[p]

  • Street Price: If you do not require partners to register end prices you will not know the end price. This can also happen when your product is bundled with other products or services from the channel partner.

     

  • List Price: If you set minimum advertised prices (MAP) you will at least know the lowest list price offered. However, most organizations do not go beyond this to know the starting price the partner offered.

     

If you sell completely through a channel you can only guess at the below items.  Most clients do not work with partners to understand these metrics.  If you do sell the same product or service through direct sales reps you will at least have a great starting point.

 

  • Willingness to Pay, Customer Value Perception and Total Value to Customer: To determine this information, a robust price survey is needed. These are designed so that the questions are not obtrusive, but the information can be gleaned by considering responses across several questions. The information is then segmented according to your go to market strategy. Tis means care is also needed in deciding who should receive the survey.

     

How Do I Begin to Get out of This Situation?

 

While this situation happened incrementally over time it usually takes a trigger to corral interest and set you on path to unravelling the blindness. 

 

Triggers can be:

 

  • You want to launch a new product and need to set pricing.

     

  • You are having Margin issues and looking to increase profitability.

     

  • A takeover of you business happens or new leaders come in.

     

However, you are not required to wait for a trigger.  To make a name for yourself and attack these issues you can follow a change process to get things going.  How?  One way is to understand an convey to others the potential results you can gain from a successful project.

 

What Steps Should I Take to Fix the Problem?

 

First, get buy in from your strategic partners that everyone can increase revenue by eliminating the blindness.  This will drive urgency.   You may have to do some convincing that this in their interest but by selecting a critical few to work with you, you can begin to work with a small team to uncover insights and quick wins.

 

Together, then determine which end customers, prospects and those who have lost deals with can be surveyed and interviewed.  Share the findings with your small team and together come up with actions to take.  Pilots can then be conducted to test pricing, packaging etc.  For added intelligence, conduct win loss studies that leverage data and qualitative interviews. This article titled “The Power of a Win Loss Analysis” will provide assistance.

 

After monitoring and more adjustments you will have a plan to take to the rest of your partner community.

 

Results You Can Expect by Taking Action

 

Understanding willingness to pay alone will increase overall revenue by 2-8%.

 

Structured discount will improve margin by 0.5-1.7%.

 

Adding pricing governance to your channel processes will improve margins by a range of 0.5 to 1.3%.  It will also enable you to gain clarity on kpis and show points of success and failure.  Knowing you are leaving money on the table is hard but with a plan in place you can minimize what you don’t know and increase revenue.

 

Download the Street Price Tool to discover possible areas of blindness when selling through partners, learn how to address these areas of blindness, and see what types of results you can expect if the necessary and proper changes are made.

 


 

Additional Resources

 

Schedule a working session at SBI’s Studio.

 

Located in Dallas, TX, our facility offers state-of-the-art meeting rooms, lounge, full-service bar, and a studio used to tape our TV shows. SBI provides the location and facilitators, all at a compelling price point.

 

As a guest of The Studio, you’ll get unlimited access to SBI’s CEO, Partners, and a handpicked team of experts. Together we’ll focus on developing an action plan for your needs by getting a month of work done in just eight hours. It’s an amplified experience that you can only get in one place: The Studio. I hope you join us.

 

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ABOUT THE AUTHOR

Barry Witonsky

Delivers a decisive course of action to sales and marketing leaders by analyzing their market, industry, company and products.

Barry leads SBI Solutions, a global practice area that provides ongoing analysis and strategic insights long after an SBI engagement has been delivered. This team of analytical, sales and marketing consultants applies advanced data science tools to ongoing client problems. This enables our clients to maintain the original value of the SBI work by staying ahead of an ever-changing market and competitive environment.

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