Arguably, the questions that product managers and product marketers have the most difficulty answering are those they receive from a salesperson about pricing. These calls often come out of the blue, when an anxious salesperson has a large deal on the table and the quarter is coming to a close. The salesperson’s anxiety is palpable, you can sense the tension and you immediately become uncomfortable.
In many organizations, responsibility for setting prices and discounts nominally lies with either the product manager or product marketer. This can put you in the line of fire when pricing becomes an obstacle to closing a deal. Even if you aren’t responsible for setting prices, it’s typically your job to defend them.
In this article, I’ll describe best practices for minimizing the number of price objection conversations you have with your sales team and making the few that occur go as smoothly as possible. I’ll focus on attended business-to-business sales models for high value technology goods or services. The considerations for product led growth, consumer businesses, and other markets are likely to be different.
Why do customers object to pricing?
At the root of any price objection is a failure to recognize the value of your product. In the B2B technology industry, value is the sum of the economic benefits a customer will realize as a result of buying your product. It includes:
- The amount of money the product helps them save
- The amount of incremental revenue the product helps them generate
- The increased efficiency (produce more with less resource) they can realize
Value is also measured by comparing with competing alternatives. In other words, value is the amount of incremental economic benefit your product provides over the competition.
When a customer objects to your price, it means the economic benefits they expect to realize in their use case are less than the price. There is a disconnect between buyer and seller in the measure of the three factors described above, or versus the competitive alternative.
This often occurs because the communications delivered to the customer as they progressed through the buyer’s journey didn’t contain the right messaging. The website content, marketing collateral, sales presentations and other assets failed to position the product and justify the price.
Of course, a price objection can also be a negotiating tactic. I’ll cover this later.
When to prepare
The best time to prepare for price objections is when prices are being set – prior to initial launch, or during a price review. This is when your market research, competitive positioning, and pricing rationale is freshest.
As you get your new product or revised pricing ready for introduction, you’ll want to create a set of tools that salespeople can use to respond to price objections without your assistance. Your objective is to minimize the number of price objection inquiries you receive, otherwise, your business will not scale. Also, self-service tools make salespeople more efficient and increase their confidence and competence with customers.
Prior to introduction is when customer marketing materials are being created by the marketing communications team. You should work together to clearly articulate the value proposition and messaging in every marketing asset. This will minimize the number of objections your salespeople receive, and, in turn fall into your lap.
Strong positioning and messaging lay the foundation
Strong positioning and messaging articulate the value your product offers the customer. It should be consistently reinforced at every step in the buyer’s journey. There are several methodologies and tools available to create messaging and positioning. Obviously Awesome, by April Dunford, is one of the best. My BPMA colleague, Adam Shulman, wrote a review in this blog post: Does the world really need another book about product positioning? Turns out, it does.
This exercise is critical to the success of your product. It affects the entire selling motion, not only pricing. A strong messaging and positioning platform relies upon a thorough analysis of your target customer segment; their use cases, pains and gains; plus a detailed competitive analysis. The exercise produces multiple important outputs, including a value proposition that concisely describes why your product is worth its price.
Positioning and messaging should be documented using templates that are easy to consume by the teams in your organization responsible for communicating with customers, such as Marketing Communications, Sales Enablement, Customer Success.
Minimize objections by communicating value
With strong messaging and positioning in hand, you can make the case for your pricing. Start by mapping out the buyer’s journey and developing appropriate marketing assets for each stage. Each asset answers questions the customer is likely to have at a particular stage, including economic benefits.
Buyer’s journeys vary widely based on industry and market segment. Here are some simple examples of stages and corresponding assets supporting value:
Awareness stage: An ROI calculator is a simple online tool you can offer to help customers quantify your product’s value in their particular use case
Consideration stage: a product comparison chart can help customers evaluate your product versus the status quo along economic and other criteria
Decision stage: A detailed case study provides important validation for your product’s value proposition
Each asset should reinforce your core positioning and messaging, including your target customer segment, problem, solution and differentiation. Assets designed to help make the economic argument for your product should enumerate all tangible and intangible value elements (features, warranty, reliability ratings, etc.)
For digital assets, make liberal use of cross links so that customers can easily find the assets that justify your value claims. For example, a recorded introductory webinar might include links to case studies and an ROI calculator.
Develop selling tools and training
No matter how well you’ve defended your value through the marketing assets customers consume during their journey, price objections can occur. When this happens, you want your salesforce ready to respond on their own. A comprehensive set of sales tools and training will give them the confidence to do this.
The mix of sales tools you may need varies widely by industry, market segment and go-to-market strategy. In addition, direct and indirect sales channels require different levels of tools and training. Here are some example tools appropriate for direct sales channels:
Presentations: Ensure each deck (1st call, Product deep dive, Purchasing details, etc.) includes value justification appropriate for the stage in the buyer’s journey
Battlecards: Develop separate cards per competitor and include direct responses to common price objections; incorporate links to supporting marketing assets, such as a TCO comparison.
Customer case studies: Develop separate case studies corresponding with each use case and customer vertical that is targeted; be sure to highlight the value realized by the customer with hard numbers (e.g. 237% ROI)
References: Maintain a database of happy customers willing to speak with your prospects, aligned with use cases and vertical industries
Sales training programs should teach salespeople to help customers explore and recognize your product’s value. The role of the product manager or product marketer is to ensure the sales enablement team has incorporated all your product’s value elements into the training; and teaches salespeople where to find and how to use the sales tools.
In addition, make sure your marketing assets are accessible through the same library used to store sales tools. You want to make it easy for salespeople to leverage publicly available resources.
Setup a “Deal Desk” for price negotiations
In certain industries and customer segments, price negotiation may be expected and healthy for your business. This type of price objection has a different context than what I’ve described thus far. Notwithstanding, the same value-based marketing principals apply because the more customers recognize your product’s value, the less likely they are to press for steep discounts. In other words, reinforcing the value of your product can help protect product margins.
Product marketers and product managers shouldn’t be involved in administering discounts, beyond setting up guardrails. Most organizations use a centralized deal desk to offload price negotiations from busy PLM/PMMs while adhering to the maximum discount levels they establish.
Take yourself out of the line of fire
Product marketers and product managers can minimize the number of price objections they receive with a combination of well-designed marketing assets, sales tools, and sales training. The marketing assets clearly position your product’s value in the customer’s use cases and sales tools and training enable salespeople to respond to objections without your help.
Doing the hard work to proactively develop these assets and tools will ensure you’re not on the receiving end of a desperate call for help from a salesperson at the end of the quarter.
Carl Blume is principal consultant at Atlantic Marketing Advisors, a marketing consulting firm serving the B2B software industry, and has held marketing leadership positions at Oracle, HP and several Boston-based startups. He has been a BPMA member since 2018.
