Globalization has enabled unprecedented hyper-competition, and all types of dynamic comparative pricing models. Yet pricing within many segments of our economy appear like something from the The Stone Age.

If you go into a white tablecloth restaurant and order the sea bass on a Wednesday, you might pay $30.  If you return to the same restaurant on a Saturday the price would be the same, even though demand in the restaurant is likely to be very different.  Eateries price on the cost plus model built in the industrial age; the price is based on some multiple of raw materials (or labor).

Our economy doesn’t work this way anymore.  Consider the market for sports tickets. Sports franchises (the Lakers for example) set the initial price for a ticket. But the market resets the price in real time based on supply and demand. If it is a Tuesday night game against the Raptors, a seat may command a few dollars more than the face value.  A Sunday game against the Celtics could command double that within a market being energized by the likes of Stubhub and other online exchanges.

Variable pricing based on nuanced supply and demand is the future, and it is the present.  Marriott has historically been the most profitable hospitality company, as its revenue per available room (the industry benchmark) often exceeds that of rivals. In the case of hotel rooms (or airfares), business-to-consumer pricing models can shift daily based on numerous variables such as weather, events, or the calendar.  Like it or not, exchanges that provide comparative prices are proliferating, in both B2C and B2B.

I am not advocating the companies participate in such portals: they the fastest way to commoditize an industry. What I am saying is that the acceptance of such tools points out a broader problem (or opportunity), that markets re-price based on real demand, not arbitrary prices set by the seller.

Businesses, including those that market products and services business-to-business will need to be more analytical about which products and services could and should command higher prices and which will command less.  To set up a fixed pricing schedule seems overly convenient in a world where buyers have far more sensitivity over some purchases than others.  A software developer may need to sell a project at a low cost to win the business, but could charge far more (on an hourly basis) for change orders that are not foreseen by the client.

Most small and mid-market companies have not done enough research to understand the relationships between the products and services they sell.  If an accounting practice sells tax work and audit services, how should they price one against the other and what is the likelihood that clients will gravitate to them as a result of their pricing model or other variables? I think few really know.

Companies should test various pricing strategies to see what works best, and be more purposeful about tweaking pricing to reflect current demand.

One of the bi-products of our caffeine crazed, media blitzed economy is that we have virtually no attention span. It is as if we have a collective form of ADD. Over time, customers get bored with their vendors, alliance partners and trade associations. Client relationships have a natural tail.

The ability to continuously delight customers is a skill mastered by few. Clients need some type of stimuli that reinforces the value we provide them and it needs to come in different forms at different times. Variety is not just the spice of life; it is the remedy for overcoming the dreaded- inevitable customer fatigue.

Entertainers understand the element of surprise all too well. We all have a lot to learn from that ingenious management mind; Jerry Garcia. In the 60’s, the Grateful Dead had a Board of Directors and a call center. Whenever “the Dead” where touring, “Deadheads” who had gladly forked over their phone numbers would receive outreach about upcoming performances. The Deadheads would do something extraordinary; they would follow the band from city to city. As every show was an ad lib (jam), no two were alike, and no one knew what the Dead were going to play. Most businesses would kill to have the raving fans of the Dead.

The problem of customer fatigue is exacerbated by the fact that challengers are incented to barrage prospects with new offers and discounts in a way that an incumbent is not. In relative terms, the incumbent can easily become complacent and offer clients much of the same. As the old adage goes, “if it isn’t broke…”.

I heard of a guy who gave a business review presentation to a client on an iPad. At the end of the presentation, he said to his client “thank you so much for your business” and handed him the iPad. Giving such generous gifts may not be as accepted as it once was, but imagine the shock value of the meeting. It is one the client will never forget! We need to find ways to maintain our clients’ attention span.

Customer fatigue only magnifies themes we have often shared in this space. The number one rule of customer relationship management is to take better care of the customers you already have than new ones you might attract. Offering our best discounts to new customers flies in the face of this principle. Organizations often position their best people as hunters, and then delegate customer service to others (who may not be empowered to make customer retention decisions). An organization can easily lose sight of its most precious possession, its most profitable customers.

Customers should be treated differently based on their lifetime value, and perhaps even receive different benefits based on their tenure.  One of my clients recently calculated their average client retention cycle (and at what time they lose the average client) and is now taking steps to change their approach over the span of the customer relationship.

Find a way to shake things up and keep customers coming back for more.

Businesses often fall in the trap of thinking that because their customers are happy, that they will remain in the fold.  Global competition has brought about switching options that did not exist before the world was flattened like a pancake. Businesses who serve other businesses (B2B) must go deeper than the occasional sales call, Christmas gift and customer satisfaction survey; they must find ways to box customers in.

I often travel on behalf of clients, who arrange rooms at the Marriot, Hyatt and upscale locations such as the Four Seasons and Ritz Carlton. If any of these chains solicited my feedback, I would give them high marks; I am satisfied. Yet given a choice, I will go out of my way to book a Hilton. As experts at J.D. Power and elsewhere have pontificated, there is a chasm between satisfaction and loyalty.

I find it fascinating that the term Customer Relationship Management (CRM) has become synonymous with overpriced and monotonous software.  The CRM revolution offered the promise of analytics that promoted tracking the most profitable customers as calculated by their lifetime value. The premise of CRM is to treat valued customers differently than less profitable ones. Somewhere along the way, many organizations lost sight of the point.

While frequent flyer programs and the like are popular, few realize the promise of customer loyalty. In the case of Hilton I receive free breakfast, cocktails, bottled water, Internet and frequent upgrades. Hilton truly treats me like a VIP, and they have boxed me in at a very low incremental cost.

So how can a B2B enterprise apply such thinking to deepen their customer relationships? There are certainly ways to provide special benefits to your best customers. The definition of best should not be limited to the customers that buy the most. It could mean who pays on time, participates in key programs, attends vendor events, etc. Special rebates can be paid to customers who demonstrate their loyalty and are easy to do business with.

There are also other intangible benefits such as direct customer service lines and faster cycle times that can be extended to those who meet certain thresholds. Companies that utilize distributors should evaluate, score and incent those that represent their product best, and meet specific performance criteria.

Your best customers are worthy of this investment, as they are the ones that are most apt to look beyond price when making decisions about their vendors. Treat your best customers like VIP’s.

As a result of the liquidity crisis and the giant sucking sound that followed, business-to-business customer relations have taken a dramatic turn.  Salespeople, beaten down by heightened customer demands and rampant discounting have become far more tactical.  As customers have attempted to flatten the playing field through RFQ’s and reverse auctions, vendors have been conditioned to comply with a new set of norms. How tedious and unfortunate.

The art of dissecting customer needs has deeply eroded. These new realities put the seller at a tremendous disadvantage, and often impacts margins and profitability. Selling organizations are better off identifying the minority of customers who are still willing to have strategic conversations.  Below are 4 types of questions you should be prepared to ask in a strategic meeting.

Perhaps the most critical element of consultative selling is getting to a decision maker. Procurement departments are typically focused on one variable; price. One way to orchestrate a senior level meeting is to ask for a strategy session or peer review. This can be positioned simply as…”the senior management of my company is planning a trip to…and they wanted to know if we can have a strategic conversation about the future and how we can; take cost out of the system, improve customer experience, reduce cycle time, etc…” In some cases, you may need to be prepared to suggest that you are considering investments that will decrease the total cost of doing business for the customer (that does not mean a price concession).

Salespeople should prepare rigorously for the meeting, digging up every possible piece of information on the company, their customers, their competitors, your competitors and about the people you are meeting with. Linked In, Facebook and other internet sites offer all type of information about clients-everything from the alma mater, to hobbies and interests.

Always allow the client to be seated first, but if possible, position so that your organizations are not seated on opposing sides of a table. Begin the meeting with opening questions and quickly transition to strategic questions. You want to first set a tone that you are there to probe and listen:

Stage 1: Opening Questions

• How many years have you been in the industry, or how many years have you been here?
• What did you do before?

Stage 2: Strategic Questions

• What is your vision for growing the business?
• What are your strategic objectives?
• What separates you from you competition?
• How will your company need to change to maintain its advantage?

Explain to your salespeople that if they interrupt the customer, or speak while you are asking questions, you will fire them on the spot (and mean it).  Many will have an overwhelming desire to present (and not to listen). Here is the golden rule: if you are speaking for more than 20% of any meeting, you are losing!

While asking strategic questions, you are observing the customer’s tone, pace and body language. If they are tactical thinkers, or simply don’t want to have a strategic conversation with you, you will observe their discomfort and move on to lower level discussions (which you should be fully prepared for).

After you have established the fundamental business problems, create a transition where the customer views you as the solution (without you even suggesting it).

Stage 3: Anchor Questions

• What are the long term ramifications of …?
• What would be the affect on revenue/profit/cycle time/customer experience, if …were to continue?

Stage 4: Closing Questions

• Do you have any initiatives to outsource … to suppliers?
• What if we were to…?

Here is the hammer. Companies (and especially purchasing departments) have seen dramatic contraction of headcount. If there is a way for your organization to accept the burden of certain  activities on behalf of the customer, you have reduced their total cost of ownership.

This approach will not work with all of the customers all of the time, but it will promote dialog the most profitable customers and those are the ones who are worthy of our time and investment.

Adapted from A Seat at the Table by Marc Miller

I have been on a speaking tour which has included multiple stops within America’s heartland. A couple of weeks ago I was in Kansas City and was reminded of our nation’s remarkable regional differences.

Perhaps it was the young lady at the front desk of my hotel who was overly impressed with my first generation iPad, the barren retail centers, or my overindulgence of Kansas City barbecue that gave me pause.  It is a place where the only thing more important than burnt rib ends is college basketball. Very different than in Florida, where I once had the misfortune of wanting to watch a Stanley Cup finals game in a sports bar where they had 12 TVs, all showing the same Nascar race – silly me.

As a strategy practitioner, I am overly fascinated by market segmentation, as it often provides remarkable insight. Our clients often segment geographically to reflect the performance of salespeople and the like. Segmenting internationally provides magnification of varying local tastes, wants and customs. Yet similar regional differences are just as apparent and important in the land of Chevrolet and Apple Pie.

For example, people in the Northeast are far more likely to wear a suit than people in the South and business hours are later than they are on the West Coast. “Ocean Pricing” does not play well in the Midwest where the cost of living is lower.  There is an entirely different values set there; people are sensible and humble, and want straight forward solutions to their problems.

In executing marketing and sales tactics, we need to be aware of regional differences and adapt our way of doing business.  It is important to be aware of the local pulse and how your offer may play differently based on the micro-economy, or regional tastes. If you were in the Pacific Rim, you would be aware of protocol; when to give a gift, and when to bow.  It is no different in understanding that when in Wisconsin, there isn’t any sports team to discuss other than the Green Bay Packers.

We should celebrate these differences; it is one of the things that makes America great.  Not to mention the “New Oaaawlens” Jambalaya, Superior Whitefish, Maryland Crab and New York Pizza, the white kind of course.  Try to get that in Los Angeles.

One of the bi-products of our caffeine crazed, media blitzed economy is that we have virtually no attention span. It is as if we have a collective form of ADD.

Over time, customers get bored with their vendors, alliance partners and trade associations. Client relationships have a natural tail.

The ability to continuously delight customers is a skill mastered by few. Clients need some type of stimuli that reinforces the value we provide them and it needs to come in different forms at different times. Variety is not just the spice of life; it is the remedy to overcoming the dreaded inevitable customer fatigue.

The problem is exacerbated by the fact that challengers are incented to barrage prospects with new offers and discounts. In relative terms, the incumbent can easily become complacent and offer clients much of the same. As the old adage goes, “if it isn’t broke…”.

Customer fatigue only magnifies themes we have often shared in this space. The number one rule of customer relationship management is to take better care of the customers you already have than new ones you might attract. Offering special discounts to new customers flies in the face of this principle.  Organizations often position their best people as hunters, and lowly customer service agents as the face of the company with current clients. An organization can easily lose sight of its most precious possession, its most profitable customers.

Vendors should track the average length of their relationships and take actions to prolong them. The element of surprise is understood by entertainers and magicians. Similar tactics can be applied from our business gifts, customer reviews, plant tours and the like. Customers should be treated differently based on their lifetime value, and perhaps even receive different benefits based on their tenure. Find a way to shake things up and keep customers coming back for more.

Double and triple bottom line companies were all the rage a few years ago. As quickly as they peaked our interest and fed our social sensibilities, they faded into the depths of the great recession.

Many have long assumed that to serve the public good yields some type of opportunity cost. That is to seek any other outcome besides profit robs an organization’s ability to deliver the highest return on investment. Yet some of the world’s hardest charging enterprises such as GE and WalMart consistently lead global movement towards sustainability and similar pursuits. They do so not only because of the obvious public relations benefits but because they view such initiatives as driving some form of competitive advantage.

Thus there is a movement underfoot to understand how our businesses make our communities better, and how our communities (including government) can support economic development. One lesson of our economic malaise is that cities and small towns are drowning as a result of failed businesses; a reflection of an environment in which business and government can be in conflict with one another.

We have a number of clients such as People’s Care, Lincoln Training Centers and the L.A. Fireman’s Relief Association that blur the line between profit and non-profits. These are financially responsible organizations that also provide shared value; i.e. they contribute social benefit to our communities.

I once completed a project for Rio Tinto, one of the world’s largest mining concerns. They were extremely committed to reducing their consumption of water in North America, and invested heavily in seeking out solutions that reduced their impact on the environment, while reducing their cost and risk. My point is that these goals do not have to be in conflict, and can actually be synergistic.

Brands such as Starbucks combine their economic and social interests in a way that enhance their brand and positioning, and promote higher perceived value. Our penchant for spending $3 on a latte instead of a $1 coffee at McDonalds or Dunkin Donuts is due in part to our interest in being part of a social contract (precipitated by Starbucks).

Give some thought to how your enterprise can augment its thirst for profit with the ability to deliver shared value.

Inspired by “Creating Shared Value” by Michael Porter and Mark Kramer HBR January 2011