The Price discussion for Win/Loss

[Ellen Naylor]

I recently finished a smaller win loss project. It was in a technical services field. I noticed that in half the losses price featured prominently, whereas for the wins, it only was a key reason less than 20% of the time. I just wonder what others experience has been that way?

While price is an important part of the equation, I think better account reps sell the customer on the business benefits for the customer around using their product, and good service is essential. A smooth implementation goes a long way as does responsive tech support. 

Hope your new year is off to a good start! I am staying busy and Cocoa our cat has now entered her 21st year.

[Arik Johnson]

Interesting Ellen - by "figuring prominently" do you mean the losses were lost because the price was too high or something else (not necessarily being too low)? And on the flip side, with wins, was the price low enough that it edged out a competing bid or was it "high enough" that it conveyed a perception of value?

In short, is price just like any other feature and must hit the "sweet spot" of the buyer - e.g., it's possible to be too low? 

[Ellen Naylor]

Yes the accounts were lost because the price was too high. When looking at the company's 3 market segments, these tended to be customers in the "low price" segment. In other cases, the competitor included a key feature as part of its basic product, which my company had to go to a partner to develop, which made their price less competitive. 

With the wins, it was interesting. I didn't ask about price. I let the customer tell me why they decided to go with my client's product, and in only 1 case was price the reason, and it was that my company's price was lower.

In this stinking economy, I didn't hear anyone say the price was too low. However, you also have to factor in your company's value proposition and how differentiated it is from the competition. With my customer, their product isn't as differentiated from other providers, so price is more important. I hope this makes some sense.

I have noticed with other customers, and my own business, that pricing oneself too cheaply is not only demeaning, but can make potential customers question your credibility.

Happy New Year, Arik!

[Arthur Weiss]

Hi Ellen

I realise you'll know this - but what I'm writing is more for others who are less familiar with using win-loss analysis and so it may not be relevant to your situation. 

One key win-loss metric should be the ratios of wins to losses. There is another metric that is probably as or even more important in this sort of situation and that's renewals vs. losses. 

If losses are high, and price is named as the key reason, then it's likely that the product is over-priced for the benefits it offers the client. It doesn't matter how much an account rep pushes business benefits, if the client feels that competitors offer the same benefits at a lower price. Even if they win the client, they will lose at renewal time. (There could also be bad will and resentment at renewal time if they feel they were pushed into buying a lemon). 

If renewals = or is higher than losses, then price is probably not important. In this case, it's the account rep not conveying the benefits. 

Essentially price should never be a key selling factor for the account rep. If it is, then you are entering a commodity market. It's important that price matches value - and you need to emphasise the value. Customers recognise something that's overpriced and underpriced. If it seems high price, then can this be justified. If it can't you will lose out in the end.  

There's a standard marketing matrix used to compare value to price (an example is at: https://www.authenticpromotion.com/pricing-strategies/pricing-strat...). Companies should know where they are on this - and this can then be fed into the Win-Loss results analysis, and may help explain what's happening. If price is mentioned as a feature and you are in the  green or yellow bits of the matrix then pricing is probably not the real reason. If you are in the grey boxes, then it probably is. 

Of course you need to know what the real value of the product is to the customer - and that should come from benchmark comparisons, customer needs analysis, etc. (It's value to the customer i.e. perceived value, not actual value. For example, if a product offers features that aren't wanted by customers, then these have no value. If they make the product more expensive they are potentially a product weakness and could lead to lost sales).