Three Reasons to Bring on the Humans!

Relationships between vendors, distributors, and customers can become long-term and complex in the B2B sphere. The large amounts of money involved make investments in time and energy worthwhile for all concerned, and price lists alone may not capture all factors that are relevant to the transaction:

1. Vendor incentives to distributors play a significant role. When resellers carry multiple product lines from different vendors, they typically have varying levels of incentive to sell those products to end customers. Deep discounts or other preferential treatment from a given vendor may significantly affect end-customer pricing.
2. Resellers are driven more by profit than by revenue. Interviewing resellers is typically the only way to understand the typical differences in profit margin among products from different vendors. Pricing from a vendor to a reseller is at least as important as end-customer pricing to understanding the supply chain.
3. Value-added factors apart from price can be critical. End customers often give preference to certain resellers (and therefore certain vendors) based on factors such as early access to new products, fast turnaround times, or even free hand-delivery of an overlooked cable to an overworked IT team on a Sunday afternoon.

This is the second in a three-part series about using competitive intelligence to analyze the pricing structures used by your competitors. The previous installment, “Three Varieties of Smoke & Mirrors in B2B Pricing,” discusses the lack of concrete, standardized pricing for typical B2B products. The third and final entry, “Three Ways Pricing’s Not as Secret as You Think,” discusses the reality that competitor pricing is not truly confidential, and how that fact should affect your research.

By Sean Campbell
By Scott Swigart