Hitting revenue goals in 2023 with a pricing strategy
When it comes to achieving your revenue goals, keeping a motivated sales team is a key determining factor of success, but it isn’t the only thing in play. From establishing a pricing strategy, and tying competitive pricing to the right product, to benchmarking yourself against other IT solution providers (TSPs), it’s important to have a comprehensive plan to generate the revenue you desire. Here are some tips and best practices to help keep your TSP business on track and achieve your revenue goals in 2023.
Sales teams are motivated by sales incentives and getting paid
There is one universal truth when it comes to sales: your team is motivated by making their numbers and getting paid. Whether you're working with a large enterprise or a small business owner, you need a competitive pricing plan.
In the process of pricing a product or service, most companies make the mistake of focusing on what they’re selling rather than the buyer itself. While this might seem obvious, many companies still need to think about what drives the purchasing decisions of buyers, and how different types of customers may require other methods for motivating them.
This can lead some businesses down a path where they're missing opportunities for revenue growth and losing money by offering discounts that aren't necessary or helpful for the customers' decision-making process. But there is good news: we've discovered a simple yet effective way to help companies identify these patterns and leverage them. By employing price points or discount bands based on customer segmentation data, companies can work towards achieving revenue goals through better pricing strategies instead of charging based on project size alone.
Leaders are motivated by increasing revenue and profitability
Here are a few things that every leader must do: be accountable for their team's performance, communicate the plan and progress, and motivate the team. Leaders can't do it alone—they need everyone to be on board with their plans, which means they need a compelling vision and mission statement that speaks directly to what matters most: profits or sales goals or both! Leaders also need buy-in because their team wants leaders who will protect them when necessary. This can include making tough, and perhaps unpopular decisions or giving team members room for growth. In this latter case, it may even mean deciding to promote two new managers at the same time.
Make strategic plans to know your next steps
One of the best strategies to ensure you hit your revenue goals is to have a comprehensive pricing plan. If you don't have a plan, it's easy to spend time chasing short-term sales that won't help you achieve your goals in the long run.
For example, let's say that a prospect comes in and wants 100 units at $10 less than your standard wholesale price. You could take this deal because it seems like an easy sale—but what happens when someone else comes along with an order for 50 units at $5 less than the standard pricing? Chances are the second customer will get priority over the first one if they look like they'll be more profitable for your company over time. Before long, you may find yourself spending hours chasing customers who only want discounts. Consider this instead: look at how much money each potential customer can bring to your company continuously over time by calculating their average spend per month.
The best way around this problem isn't necessarily just saying "no,” though sometimes that's necessary. By ensuring that every sale has a solid plan attached, anyone on your team will know precisely how much money they'll make themselves, how much money they'll bring into the business, and why those numbers matter to everyone involved.
Make good offers to help you hit revenue goals
Price points or discount bands that are easy to understand and remember will make it easy for your sales team to make offers and sell more. These price points should align with your revenue goals, and your discounts offered should be evident on proposals so they can be communicated clearly to customers.
In addition to being an excellent tool for managing expectations, discount bands also help you quantify how much money you need to sell each month or quarter to get to your goals. You can also track how well you're doing against those targets over time by comparing these "overdeliveries" (money above what you budgeted) against any under-deliveries (money below what was expected).
Benchmark yourself against others in the industry
Measuring data and comparing it against your past sales performance or other peers in the TSP industry is a good way of finding out your strengths as well as identifying areas for improvement. Performing benchmarks allows you to get your company on par with the growth and success of other businesses in your industry or niche. By assessing what other companies are doing successfully, you can develop a plan to boost performance and take advantage of opportunities.
Service Leadership, Inc. is a proven partner that uses critical business data and insights to maximize organizational growth and boost profitability. For over 20 years, Service Leadership Inc. has been delivering industry-leading benchmarking, helping TSPs get ahead of the competition. With the S-L Index™ Quarterly Benchmarking, you will gain access to tools that provide profit improvement evaluation, expert commentary to optimize financial performance, as well as an Annual Value Creating Performance Chart™ that helps you create higher value for stakeholders.
Track your progress with intelligent reporting
Showing your value to clients has always been a challenge, but it doesn’t have to be. It’s crucial to benchmark your business and know where you stand against others in the industry, but it’s equally important to let your clients know too. Using a tech solution with intuitive client reporting features can help you increase transparency with your clients as well as build stronger relationships with your business partners.
Having accurate data is crucial to growing your business, but it can be difficult to track various types of operational data on different systems. It would be useful to have solution that seamlessly integrates into your business tools, with data dashboards that consolidates all your important data so you can identify patterns and trends more accurately for data-driven business decisions.
We’ve spoken about motivating your team and keeping them accountable for hitting their KPIs, but what if they could see their performance against others in real-time too? A data management tool also simplifies the tracking of KPIs, sets expectations, and even encourages some healthy competition. It gives your team full visibility into how they are trending towards their goals.
In conclusion, having a pricing strategy could be the difference between achieving your sales targets and missing them. When you have effective price points for moving parts of your project, your sales team can easily make offers to achieve their KPIs without compromising on customer experience. A pricing strategy combined with attractive service offerings and intelligent reporting puts you in a position to win more deals and get one step closer to hitting your revenue goals.