If you were to ask the world’s greatest scientists and experts about the possibility of a virus outbreak in 2020, most of them would probably just laugh at you. Unfortunately, the coronavirus pandemic took us all by surprise. We had no idea that it will spread so easily around the globe, we did not expect that it would be so dangerous, and no one knew what kind of impact it would have on the world’s economy. There was an especially hard impact on business-to-business (B2B) transactions and services.
During the beginning of the outbreak, many companies were faced with all kinds of challenges. Many companies also had to endure a lot of changes that might potentially bring them to bankruptcy. But, this was needed to ensure the safety of the people. Even the most experienced business managers, CEOs, or other people with high-ranking in businesses made some of the worst B2B pricing strategy mistakes.
There was simply no way of avoiding these mistakes because we have not endured this kind of a virus outbreak in the last 100 years or more. It makes sense that even the biggest corporations were not able to deal with this kind of situation.
However, since we have some idea of what happened in these last five or six months, we now have the knowledge to help other businesses to avoid making the same pricing strategy mistakes that other businesses already made.
1. A slow transition to online presence
One of the biggest pricing strategies mistakes many B2B models made is the fact that they do not manage to transition to an online market quickly enough. In the first few months, when we still had no idea what coronavirus actually was, how it spread and what it could do, there weren’t any massive changes in both day-to-day life or in the business world either.
However, as scientists quickly learn that the coronavirus can easily be spread through even the simplest object such as food products, doors, vehicle seeds, and so on, the governments had to completely shut down everything. People were not allowed to leave their homes during a certain time throughout the day, which meant that obtaining essentials was impossible.
Fortunately for the people, many companies started to acclimate to this new way of life. Online shops, fast deliveries, delivery people equipped with masks, gloves, and disinfectants, and many other additions that made people feel safer. But, this is where most B2B pricing strategy mistakes were made. Because of the increased costs of extra personnel and for delivery, the pricing went up as well and ultimately lead to unsatisfied customers.
2. Dropped prices too low
Another major mistake B2B businesses made these last couple of months is dropping the pricing for some products to low. And, it is understandable why so many companies did that. Like I already said, no one had any idea what would happen in the next couple of months. For all we knew, there would be a major economic global crisis that would take decades to come back from.
So, lowering prices to motivate customers to start purchasing the product again was the most obvious solution to this kind of a situation. However, this is what almost every company did in every industry. This decision did not lead to an increase in demand. The reason that this is such a bad decision is that it will create a problem with competitors. Lowering the prices by a lot will push competitors to do the same thing. Entering a price war in times like this is never a good idea.
My second point about why this is such a bad move is because sooner or later, the coronavirus outbreak will just be something of the past. Things will get back to normal, people will start working, will have money and they will go shopping. Unfortunately, the products that have been brought to such a low price will probably stay at that point. The pricing expectation for this product is now permanently lowered and companies will have to put in a lot of effort and money to bring that expectation up.
So, if there is another quarantine period in the next several months, to avoid this kind of mistake, I think it is safe to say that patience will be your best advantage against your competitors. Because when people start to run out on these products, they will come back to you in the future for even more sales where you will be able to bump up your pricing.
Keep in mind, you may have a lot of trouble finding the optimal pricing during the coronavirus outbreak. Thankfully, there are some price optimization softwares you could use, such as the one from intelligencenode.com that can give you a hint on what your next step should be.
3. Understand that people are scared
Most of the time, through efficient advertising, you can influence or alter people’s opinions about certain brands or products. However, during the coronavirus pandemic, things are a little bit more different. Now is not the time to force your opinions on your customers, it is time to understand how your customer’s values have changed.
If you truly want to retain your clients even after the outbreak, there are some things that you will have to change that you probably won’t like. It is essential to show your customers that you are willing to do everything to retain them and help them.
How you’re going to do this, I cannot tell you. Whether you are going to work with the pricing, alter the product, or change your ways of delivery, that is entirely up to you. You might not even do any kind of drastic change in your B2B pricing strategy, but it is important to show people that you understand their problems and that you are willing to make the necessary sacrifice. Although you still have to keep your business in mind and how you can profit with this kind of marketing.
The next couple of months will be unpredictable, but it is essential not to panic during these times. A good leader will stay calm in the most stressful situations and will lead the business to success.