The Future of Sales: Serving the Long Tail of Accounts and Pricing with Precision

This article first appeared in MarTech Series. 

Are you thinking about the future of sales? With almost 90% of sales having moved to a virtual model, it’s more important than ever to ensure sales teams understand customers’ needs. In today’s ever-competitive landscape, each sales representative must be equipped to serve the long tail of accounts and price more effectively for each transaction.

However, the current, unpredictable business landscape and ongoing disruption often lead to misguided and fear-based decisions in the field. Each of which, when inspected individually, may seem inconsequential; yet it is the sum of each small misstep that can lead to significant margin erosion and revenue leakage for a business.

Future of Sales in COVID-19 World

In this article, I’ll share why it’s critical that the sales team of the future be equipped to serve each customer as well as the best customer and avoid a race to the bottom on price.

Untapped Opportunity in the Long Tail of Customer Accounts

Typically, within a B2B company, 20% of the customer base is in the “strategic account” category, and for good reason. It’s not uncommon for 80% of revenue to be derived from this top tier of accounts. Rightfully, the most knowledgeable sales reps are appointed with maintaining and growing those relationships.

Over time, through product line proliferation or mergers and acquisitions, companies have grown to a complex scale that simultaneously asks sales reps to cover more accounts while accepting that, by doing so, a significant amount of customers aren’t receiving the dedicated attention needed to maintain and grow wallet share.

However, in the face of COVID-19 disruption, the question remains:  How much revenue are you missing in the long tail?

Findings from our 2020 global benchmark report indicate that the total available opportunity of empowering sales reps to retain and grow the accounts within your existing customer base is significant. In terms of customer churn, measured at the product category level accounting for both decreased purchase volume and outright defection, most companies lose between 4.5% and 16.1% of available revenue. In terms of cross-sell to actively grow wallet share, companies miss 3.2% to 14.8% of available revenue annually for product categories they sell — and their existing customers need — that are not bought at expected levels.

This long tail of customer accounts, sometimes referred to as house accounts in distribution, are typically served when visiting a branch or calling in when they need something. Sales leaders can utilize the newly available bandwidth of outside sales teams by giving them growth and recovery actions to take with these customers. Predictive sales analytics can quickly deploy these insights at scale, accounting for all customers and product categories. The impact is typically an increase in same customer sales of 5% to 15%.

Reject ‘Gut Feeling’ Pricing

Pricing is often considered the last bastion of guesswork in most B2B companies — a problematic move considering it’s the most powerful profit lever available. There is an underlying assumption that salespeople know their customers and the market better than anyone, and are therefore left to make pricing decisions, often with little to no guidance. Pricing is often an emotional decision, especially in a challenging business environment. Without market aligned price guidance and pricing guardrails in the place, many salespeople tend to discount more than required out of fear of losing a deal.

Recently I had the pleasure of interviewing John Gunderson, vice president of sales, analytics, and e-business at Modern Distribution Management (MDM), on the B2B Reimagined podcast, who put a fine point on the issue, “Uncertainty results in rash and reactive pricing decisions — and we’re seeing a lot of that now in the marketplace.”

It’s certainly a phenomenon that I’ve observed time and again at Zilliant, and this type of reactive, emotional pricing only serves to do more damage than good. There are instances where lowering the price can result in more volume, however, lowering price will not compensate for there simply being less demand in the market due to economic factors. Once you lower price across the board and set a new market expectation, it can be difficult to regain your previous price position.

Only by understanding price elasticity in each micro-market of a business can you determine where to lower price to pick up more volume, where to hold the line on price, and where you can increase price without sacrificing volume. This type of surgical control over prices can allow companies to set more precise prices and given sales reps discounting guardrails that equip them to make the best possible pricing decisions. Now is the time to adopt advanced price optimization and management solutions, rather than letting prices slip into a free fall, eroding margin along the way.

Conclusion

While it’s true that COVID-19 has resulted in massive disruption of nearly every facet of life and business, for the B2B companies to remain competitive, it’s critical that their sales teams be equipped to serve each customer as well as the best customer and avoid a race to the bottom on price.