Primary research for B2B pricing

By Rashaqa Rahman

At Ibbaka, a question that we frequently come across is “What does primary research for B2B pricing work look like?” For many organizations, the biggest obstacle to pricing research is not limited internal resources, but not knowing what to ask. Market segmentation is the foundation to value-based pricing. Market segmentation studies start with understanding how differentiated value is created for various customers (differentiated V2C). This is usually done through a combination of surveys, in-depth interviews and analysis of usage data. So how does one glean insights into value creation, especially within the B2B context through surveys and interviews?

Unlike B2C markets, the scale of primary research work for B2B markets is usually limited to smaller sample sizes. This means that there is a smaller window of opportunity to ask the right questions and uncover the underlying patterns in needs and behaviour that can be used to segment the market, thereby simplify marketing, sales, support and pricing.

Here are some primary research best practices that we follow at Ibbaka that can have a positive impact on pricing design:

The focus of the research is around value creation and not product/service features and functionality

It is important to take an outside-in approach and understand how an offer creates or can potentially create emotional and economic value for the customer. More often than not, organizations get fixated on asking questions related to the features and functionality of their offer. This limits the scope of the research, focusing on the validation of existing features whereas the focus should be on uncovering the potential for creating a differentiated offer. Without differentiated value, there is nothing to price. Value questions should not be so guided that we miss the customers’ perspective on their unmet needs and what value creation means to them.

Do not ask about willingness-to-pay

Sure, it seems like an easy enough question to ask. However, directly asking the research participant how much they are willing to pay is pointless because (a) we will get a misleading answer as it is a difficult question for the participant to answer arbitrarily, (b) willingness-to-pay is context specific and can be shaped by how the offer and price are framed. There are indeed statistical research methodologies like conjoint analysis that are used to glean customer willingness-to-pay, and can be used in addition to primary value research. However value research through surveys and interviews should only be focused on understanding customer value creation and buying processes, which can then be used to shape willingness-to-pay. Understanding value creation will also help craft robust value propositions that shape customer willingness-to-pay.  

Be wary of confirmation bias

Given the limited sample size for primary research work in B2B, it is critical to remove confirmation bias when analyzing patterns within the data. If the analysis is done manually without the aid of algorithms, it is important to look at the data from multiple angles to differentiate between correlation and causation within the data. This work is foundational to pricing design. At Ibbaka, we have developed proprietary data clustering algorithms that can identify patterns in data. We use this with both structured data and open-ended survey and interview responses. This approach makes it possible to identify hidden patterns and to avoid confirmation bias.

Make the research work value added for the customer

Value research makes the customers a part of the value creation and pricing design process. The goal is to glean the most insight while making the process as quick and easy as possible for the participant (who may also be a customer or prospect). At Ibbaka, we structure surveys and interviews such that the process is value added for our clients as well as their customers or prospects. A good survey or interview helps the participant understand their own business better and it is often the first opportunity they are given to articulate how they experience value. The onus is on Ibbaka to craft surveys and interviews that are short and to the point, but well-balanced. It is also best practice to share insights from the research work with the research participants in appreciation of their valuable input. Sharing insights lays the foundation for an ongoing dialogue with customers and/or prospects.

At Ibbaka, we have a proven track record of crafting value-based pricing research across many different industries, from early stage startups to Fortune 500 companies. We boast a 100% completion rate by participants for our carefully crafted surveys for pricing work, indicating participants find our research methodology value-added and engaging. We would be happy to chat with you on how you could leverage your internal resources to undertake pricing research that is foundational to robust, enforceable, pricing design.

We believe in creating a shared community and dialogue around pricing. If you have a few moments to spare, and would like to share your insights on how organizations create, communicate and capture (in price) the value of their innovations, please take our pricing innovation survey. We will be sharing the survey results with participants.