Improving Sales Performance Through Peer Pricing
Improving sales performance through Peer Pricing
How can a bank identify a sustainable price level in each market in which it operates? How is it possible, in a variety of situations and different commercial contexts, to understand which RM is applying the most appropriate pricing strategies? Is there a methodology that allows banks to allocate and to analyze the price applied to complex customers?
Let’s think about corporate customers, whose complex operations require the simultaneous evaluation of a plurality of different factors such as the turnover, the industrial sector, the geographical areas in which it operates and the market share or profitability of the whole group.
In many occasions, especially when the bank operates in several geographical areas and with different types of customers, it is difficult to assess how well a RM sets and sticks to prices due to the diverse sales situations. Professional pricing management, and a proper comparison of the different situations, however, are fundamental elements for an effective commercial strategy. Peer Pricing precisely helps to determine those factors that allow an objective and effective comparison between RMs pricing performances with the purpose of providing a target price for each commercial context. That price is the one actually applied by the best performers for that specific cluster within a comparable operation. Implementing a Peer Pricing program provides numerous advantages.
The most relevant are:
- Guide and incentive for RMs. Applying best practices and comparing performance among peers encourages RMs to improve.
- Dynamic performance evaluation. If best performers achieve higher results, more challenging targets can be applied for the whole network.
- Improvement of sales results. Identifying a target price improves the final results, as every RM obtains a point of reference, that is, the price his/her peers apply in comparable situations.