Master SIPOC for Sales: Pricing Done Right with SIPOC Diagrams
- CEO at DeckLinks, Speaker, Podcast Host
- Published on October 17, 2022
- Updated on August 29, 2024
Have you ever felt like you’re flying blind when it comes to pricing your products or services? You’re not alone.
Harvard Business Review did a survey of 1,700 Companies and they found that top performing sales teams are more likely to:
- Set prices on a customized, case-by-case basis for individual customers and products rather than using a one-size-fits-all pricing approach
- Structure salesperson compensation to encourage prudent pricing decisions through an appropriate mix of fixed and variable pay components
- Make ongoing development of pricing and sales teams a priority through providing training and tools to build skills
The results showed that excelling across all three of these pricing capabilities offers major advantages. Among the sales teams that had mastered customized pricing, incentive alignment, and personnel development, 78% were top performers. In contrast, of sales teams lacking mastery in any of these areas, only 18% reached top performance. This highlights how achieving excellence across multiple pricing disciplines can provide a significant competitive edge.
Pricing is not a dark art, it’s a science. But for many sales teams, pricing feels more like guesswork than science. Is there a way to approach pricing with rigor and consistency? Absolutely. The secret weapon is right in front of you: the SIPOC diagram.
SIPOC stands for Suppliers Inputs Process Outputs Customers. In this article, we will discuss how you and your sales team can use SIPOC for sales.
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KEY TAKEAWAYS
- Identify all suppliers and inputs when creating a SIPOC diagram for pricing. This includes things like customer budget, competitor pricing, internal margin requirements, and any other data needed to set prices.
- Directly ask customers about their budget. This gives you a clear sense of their spending limitations and ability to pay.
- Analyze proposed pricing against customer ROI. Make sure your prices align with the value customers will gain from the product/service.
- Review pricing regularly against profit margin goals. Prices must strike a balance between being competitive and meeting internal financial targets.
- Get internal approval for pricing proposals before presenting to customers. This alignment ensures the deal works for all involved parties.
- Present pricing in clear tables or charts. Tiered pricing often works best, giving budget options. Format pricing for quick digestion.
- Offer 3 pricing tiers – low, medium, high. This appeals to a wider customer base than a single price point.
- Update pricing as needed based on changing conditions. Review frequently and adjust to stay competitive and profitable.
- Use video narrations to increase proposal effectiveness. Humanize sales materials and boost engagement.
- Leverage SIPOC diagrams to organize pricing data. SIPOC provides a structured framework to gather and present key pricing inputs.
Use SIPOC diagrams to create a Pricing page for your sales presentation
Creating a pricing page for sales decks and presentations can often seem like a daunting task, but using a SIPOC diagram can make this process much simpler. By mapping out each SIPOC element for your pricing page, you can easily identify and organize the necessary information to create a compelling sales deck or presentation.
How to create a SIPOC diagram to create pricing charts and tables for sales decks and presentations
Step 1. Identify Suppliers and Inputs
When creating a SIPOC diagram, sales reps need to identify all of the relevant suppliers of information that will help them create a pricing page for their sales decks and presentations. It is important to include all necessary parties and Inputs to accurately map out the process.
Step 2: Identify the customer's budget.
When it comes to making a purchase, customers’ budgets can vary greatly. Sales reps need to have an understanding of the customer’s budget to tailor their pricing page and navigate any potential financial constraints.
One way to determine a customer’s budget is by asking directly, such as inquiring about their preferred price range or what they are hoping to spend on a certain product. Another approach is to gauge their level of interest in various options, as well as their willingness to negotiate on price.
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Step 3: Analyze customer ROI against proposed pricing.
When determining to price for a product or service, it is important to consider the potential return on investment for customers. By analyzing customer ROI against proposed pricing, sales teams can make informed decisions about how much to charge for their products or services.
Factors that could affect customer ROI include the value provided by the product or service and competitors’ prices. Conducting market research and gathering feedback from current customers can help in this process.
Step 4: Analyze pricing against profit margin requirements.
It is important for sales teams to not only assess how their prices compare to those of their competitors but also how they align with their internal profit margin requirements.
Once sales reps know the acceptable profit margin, they can then adjust prices accordingly to ensure they are meeting both external market demands and company financial goals. However, it is important to note that pricing is not a static concept – sales teams must regularly review and revise in response to changing market conditions and internal business developments.
By taking a proactive approach to pricing and profitability assessment, your sales team can position themselves for long-term business success.
Step 5: Send proposed pricing for internal approval.
When it comes to closing a deal, pricing can often be a sticking point for both the client and internal stakeholders. As a sales rep, it is important to understand the company’s pricing strategy and have the ability to negotiate effectively.
However, in some cases, it may be necessary to get approval from other departments or decision-makers before presenting a final pricing offer to the client. It can take time and careful communication with all parties involved, but ultimately getting internal approval on proposed pricing helps ensure clear alignment on goals and objectives for every aspect of the deal.
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Step 6. Create a price table or a chart to include on the Pricing page
A clear and easily accessible price table allows clients to quickly and easily see the cost breakdown for different services or packages, making it easier for them to make a decision. By taking all of the elements from the SIPOC diagram into account, a sales rep can create a comprehensive and realistic price table that helps them stay competitive while also keeping the prices in line with profit margin requirements.
Of course, it’s important to constantly review and update the price table as circumstances change. However, utilizing the information from the SIPOC diagram can provide a solid foundation for creating an effective pricing strategy.
In many cases, it is highly effective to provide 3 tiers of pricing. The idea of offering three pricing tiers may seem counterintuitive at first glance, but it can be a smart sales strategy. By offering low, mid-range, and high options, customers have the opportunity to choose the level of product or service that best fits their budget. This allows for both accessibility and flexibility, drawing in a larger range of potential customers.
Additionally, having tiered pricing sets clear boundaries for customers and can help prevent price haggling or negotiation. Overall, offering three tiers of pricing can be an effective way to draw in a diverse customer base.
How to increase the effectiveness of your sales presentations and proposals
In the world of B2B sales, first impressions are crucial to success. That’s why it can greatly benefit your sales team to incorporate video narrations into your sales decks and presentations.
Not only does a video narration make for a unique and engaging buying experience, but it also gives clients a chance to connect with and get to know the sales rep on a more personal level.
In addition, video narrating sales decks and presentations adds another dimension of approachability and adds a human touch that can set you apart from competitors who stick with traditional PDF and PowerPoint presentations and proposals.
It can also provide clients with an easy and convenient way to review the information at their own pace. Incorporating video into your sales materials is a great way to increase their effectiveness and capture the attention of potential clients.
DeckLinks is a video platform that allows sales and marketing teams video-narrate their PDF documents like sales decks and presentations. The Video PDFs then can be shared via a trackable link. Engagement analytics allows sales reps and marketers to identify the most engaged prospects and clients.
Watch some video presentation examples here.
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FAQs
What is a SIPOC diagram and how can it help with sales pricing?
A SIPOC diagram maps out the key elements of your sales process – suppliers, inputs, process steps, outputs, and customers. Analyzing this workflow visually helps you identify inefficiencies to streamline pricing and boost margins.
How does a SIPOC diagram help identify pricing optimization opportunities?
The visual workflow shows where unnecessary steps or waste may exist. Eliminating inefficiencies allows you to refine pricing based on true costs to serve and value to customers.
How can SIPOC analysis help sales teams better align on pricing?
Mapping the cross-functional steps from lead to order creates transparency into the true costs and resources involved. This alignment enables pricing optimization based on a shared understanding.
What mistakes should be avoided when using SIPOC diagrams for pricing?
Don’t make it too complex – prioritize the 10-15 most critical steps impacting pricing. Avoid getting stuck in current state only – focus on future state opportunities.
How often should pricing-focused SIPOC diagrams be updated?
Revisit the SIPOC quarterly as processes and priorities evolve. Significant organizational or market changes may require a pricing diagram refresh.
Can SIPOC diagrams be used for pricing across different product lines?
Absolutely. Develop separate diagrams for varied product pricing processes to reflect unique considerations, steps and opportunities.
About the Author
Lidia Vijga is a seasoned professional with 10 years of first-hand experience in B2B sales and B2B marketing. She has a proven track record of driving growth for companies across various industries. Throughout her career, Lidia has led numerous successful sales campaigns and implemented innovative marketing strategies that have significantly increased revenue and reduced customer acquisition cost for her clients. Lidia regularly shares her insights and experiences on LinkedIn, webinars, and public speaking engagements. Lidia believes in the power of personal qualities such as kindness, empathy, and the willingness to understand others. She is committed to empowering client-facing teams with tools that enhance their talent instead of automating it, and she firmly believes that teams that show their human side grow companies much faster.
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