High-tech Sales is often direct but almost always also through partners. Especially for smaller accounts or customers, to which you don’t have easy access (e.g. because of the geographic distance, your positioning or company size), it can be very effective to address such target customers through partners. However, that requires an effective channel management. One success factor in channel management is a partner program. A formalized partner program mainly serves two purposes: You signal to the market that you have many interested partners, in fact so many that you need to manage them through a generic program. That message makes your company appear very attractive for partners and gets them interested in learning more about it. Your sales team can efficiently manage partner prospects by providing information on prices and benefits based on the program. … Read more
In start-ups there is a constant fear by the top management that the prices might be too high and therefore not enough customers will buy. Along with this there is always a tendency to reduce prices or to offer large discounts, in the false hope that this would accelerate Sales. The reason for such fear usually is that price confidence is still low because prices are not established in the market yet, and – again – a wrong understanding of the demand curve. Start-up managers too often assume that low prices will lead to more revenues. Therefore, they try to win new customers by all means, at literally “any price”. However, “price fear” and the resulting low-price-strategy are wrong! Here is why: 1. Price is based on value If you did your homework, your price … Read more
Everyone in Sales (and probably everyone in business) has heard the truism that customer acquisition is three times more expensive than customer retention. That is such a high-level statement, it is hard to say what it relates to and what to take out of it (by the way, if any of you readers knows the origin of this myth, please let us know and comment on this article). Costs for customer-related expenses in such a comparison can only be accounted in total, meaning for the entire customer lifecycle, or per customer transaction or purchase. 1. Total Customer Lifecycle Let’s first look at this from the high-tech sales perspective: Presales time in high-tech sales is usually 3 to 24 months. However, the average customer lifecycle is usually 2-3 years, often even 5 years and more. Therefore, … Read more
Customers typically use reference prices when making purchase decisions. It is very hard, if not impossible, for anyone to assess the absolute value of a product, service or solution. Therefore, customers compare the price with alternatives. Such alternatives can be other methods of solving the same problem or they can be competitive solutions from other vendors. But customers also compare prices with previous prices, special prices or standard list prices. Therefore, once you set the right pricing based on the value of your product, the question is if new customers can be won and revenue can be increased by offering price promotions (also called price frames). There is an interesting study by the US Office of Fair Trading, conducted by the University College London. They investigated how customers react to various promotions. Even though it … Read more
