Price exceptions. Floor-price violations. Approval escalations. Custom terms and conditions. Package workarounds. Repeated requests for “just this one deal.”
Most B2B pricing teams will see plenty of these things over time. And it’s very easy to chalk them all up to “personnel” issues…
Some rogue sales rep thinks the pricing rules don’t apply to him because he was a superstar at his last company. A sales manager is letting her team get sloppy in the last week of the quarter. A new procurement person is trying to prove themselves by making ridiculous demands. Somebody is trying to push through a bad deal to cover their bacon on missing the number again.
And someone else is insisting that their ugly deal is “strategic”…which in many companies is just shorthand for, “Please stop asking so many questions and just approve the deep discount already.”
Sometimes, of course, these explanations are exactly right.
People do dumb things. Salespeople take shortcuts. Customers make unreasonable demands. Managers occasionally look the other way because quarter-end is approaching and suddenly all those carefully designed pricing policies seem more like…well…suggestions for less urgent times.
But when exceptions start occurring repeatedly, across multiple people, customers, deals, or situations, it’s probably worth considering another possibility…
Maybe people aren’t short-circuiting the systems and processes because they’re lazy, stupid, or weak, but because the systems are deficient in some way.
Exceptions and deviations from what’s expected are often tell-tale signs or signals of deeper issues. They can be little flashes of evidence that the orderly commercial environment we modeled in the conference room isn’t lining up particularly well with the messy one that’s playing out in the real world.
Take price exceptions, for example…
If salespeople routinely need approval to sell below the recommended prices, we might conclude that our salespeople are just feckless negotiators who fold like cheap lawn chairs every time a buyer even raises an eyebrow.
Or…we might suspect that the pricing recommendations are inaccurate.
Maybe the segmentation model is too broad. Maybe different customer types are looking at different competitive alternatives. Maybe the offering delivers materially different value across different applications. Or maybe market conditions have shifted while the pricing structure has remained frozen in time.
Repeated floor-price violations can tell a similar story…
If deals consistently need to go below the established floor, perhaps the floor itself is wrong. Maybe cost inputs have changed. Maybe competitive intensity varies significantly across segments. Maybe we’ve defined one floor for a collection of transactions that really need several different floors.
Constant requests for custom terms can signal that the deal structure doesn’t match how customers actually want to buy. Persistent package workarounds can suggest that our good-better-best architecture is missing an important use case. Repeated requests to waive minimum quantities might indicate that our assumptions about customer economics are a little too rosy.
And if exceptions suddenly cluster around a particular product, customer type, geography, application, or competitive zone, something bigger might be shifting beneath the surface. Maybe end-user demand is softening. Maybe upstream supply is drying up.
Or maybe a desperate competitor has decided to get big…or go broke trying.
The point is that before dismissing every exception, system bypass, or process workaround as just being some combination of selfishness, weakness, stupidity, or poor supervision, we need to think of them as diagnostic signals.
We need to track the exceptions. Categorize them. Look for patterns. See where they cluster. Watch for changes in frequency and magnitude. Look for recurring themes and rationales. Drill down to root causes.
Then we can start asking the more useful and productive question…
Not, “Why won’t these people just follow the pricing processes, systems, and rules?”
But rather, “What could all these exceptions be trying to tell us about the pricing processes, systems, and rules?”
Diagnosing Pricing Problems
When companies stop at a default diagnosis of, “Something’s wrong with the pricing,” they never identify and fix the true root-causes of the issues. In this on-demand webinar, learn how to identify the real root-causes behind pricing performance issues.
Pricing Process Improvement
In this session, we discuss the critical differences between process types, how to use end-to-end process mapping for diagnostics and prioritization, pricing technology considerations, and common mistakes to avoid.
Dealing with Price Exceptions
For many teams, their exception-handling processes are a significant and ongoing source of frustration and inefficiency. So how should you go about improving these critical processes?
