Pricing - The Difference Between Sales and Marketing
The role of marketing is to generate enquiries. The role of sales is to convert those enquiries.
Most marketing people are paid a salary that is fixed and based on their level and years of experience.
Salespeople are also paid a salary but with a bonus that is performance related with the main performance criteria being revenue.
Therefore it is in the salesperson’s interest to sell the most higher priced options so he or she gets nearer to their target and achieves their bonus.
One is paid on enquiry generation which doesn’t have a revenue pressure attached. If the marketeer can achieve revenue through volume then so be it.
The core difference is the marketeer thinks and promotes in terms of “Prices From…” where as the salesperson looks the range of products and services and thinks that ‘The Prices Start Here – at the top...”
Upsell is so much harder than downsell. Imagine if the marketing department began their promotion with, “Cruise in stateroom luxury from £11,907 per person.” Rather than, “Have an inside cabin from just £4,973 per person.”
Would the salespeople reach their targets quicker? Would revenue and profitability be assured? Would we be aiming at marketing to our best demographic first rather than starting at the lower level?
Four years ago we were asked to design a Sales through Service model for a leading Homewares retailer. They were knocking John Lewis off their perch in terms of market share and wanted to sell higher priced items and nudge their demographic up a notch. The Reality Team undertook some Customer Experience Checking – our version of the mystery shop
I walked into their Milton Keynes store and asked for pillows. I was taken to the start of the aisle and shown their lowest priced pillow for £5.99. The assistant told me that they ‘started here’ and went all the way up to some Hungarian goose down pillows from a rare Hungarian goose at £89. I determined the problem as quick as Sherlock Holmes. Would the customers upsell themselves to the £85 version when they started at a fiver? Of course not, at least not enough people. Some people wouldn’t be bothered to walk the distance let alone make the mental leap in price.
When you offer bronze you sell bronze. When you offer gold you’ll sell more gold and silver. If I am offered the most inclusive software and support for £549 in the first instance and then the silver and gold options, I am more likely to engage in a reciprocal concession, a middle ground rather than go to the lowest option.
Many salespeople are in the mindset of the marketing department, “if that’s what we are promoting then that’s what is actually valuable, our higher priced options can’t be as good value,” they tell themselves.
The biggest favour you can do for yourself is reframe your thinking and realise that ‘the prices start here’, and here is the top of the range not the bottom.
You are not your customer. Your demographic and background, income - disposable or otherwise, has no bearing on them and their personality and what they can and can’t afford.
Prices from, is like selling vanilla ice cream with no sauces or additions and selling only vanilla ice cream isn’t going to help you make your hundreds and thousands.