The Next Frontier: The B2B Pricing World

According to Forrester Research, B2B e-commerce sales are now more than twice the size of B2C e-commerce and are expected to achieve $559 billion in sales in the US by the end of 2013. Because of the size of the B2B opportunity, an increasing number of companies are exploring how technology and specifically, e-commerce platforms, will impact how buyers will purchase industrial products in the future. Recently Oracle reported some interesting findings (Oracle’s 2012 B2B E-Commerce survey):

• 28% of respondents said that over 50% of their revenues come from the online channel.
• 31% of respondents said direct sales are still driving most revenue, but online is growing in importance.
• 80% of respondents agree that customer expectations have changed due to B2C/retail practices.
• 80% of respondents said that they invested in their commerce platform in 2012.

While it may yet be a few years before B2B supply chain networks are totally disrupted, we can already see the first signs of disruptive changes. Three major players have already made some critical moves. For example, many traditional and standard industrial goods can already be purchased on the Amazon Supply platform. Google is developing a powerful marketplace for B2B companies to search for product alternatives. And Grainger has become a very large B2B sourcing platform, and is well-recognized as one of the most user-friendly B2B sites.

What are the critical implications for B2B and industrial firms?

1. Conduct a deep customer segmentation process based on user needs and what they are looking for through each potential trade channel.
2. Address the role of e-commerce platforms in their current business models. It is inevitable that e-commerce is going to be a prevalent force in the B2B world. Oracle reports that 26% of B2B respondents said that mobile web /apps influence revenue the most.
3. Be ready to solve channel conflicts quickly as B2B buyers have more choices in the market and faster ways to source standard off-the-shelf products.
4. Be equipped with price intelligence technology to be able to respond to price pressure and price matching requests, the importance of which has been underscored by recent acquisitions by The Home Depot and McKinsey (more on these in an upcoming blog post by the authors).
5. Have candid and realistic internal discussions on what might happen when Amazon Supply starts offering a large portion of your products online at a potentially lower price. How do you prepare for it? How do you react? What comes next?

The tidal wave of price transparency is coming to B2B, and it will be disruptive. A wait-and-see position for B2B and industrial companies is not acceptable. B2B companies have a unique opportunity to learn now how brick-and-mortar retail chains are responding to the price transparency challenge created by online competitors, comparison shopping engines and mobile devices. Investments in price intelligence software will not be optional. The real question is whether these firms are prepared to proactively disrupt themselves, or are waiting to be disrupted.

Stephan Liozu (www.stephanliozu.com) is the Founder of Value Innoruption Advisors and specializes in disruptive approaches in innovation, pricing and value management. He earned his PhD in Management from Case Western Reserve University and can be reached at sliozu@case.edu.

Alexander Rink is the CEO of 360pi, the leader in delivering price intelligence to help retailers right-price to increase their revenues and margins. A veteran entrepreneur, technology executive and former management consultant at Bain & Company, Alexander is an INSEAD MBA, with an Engineering degree from the University of Waterloo. He can be reached at a.rink@360pi.com.

3 Critical Ways Pricing Influences the Buyer’s Behavior

Leigh Caldwell is proving that pricing is not just a numbers game, it’s a mind game as well.



Leigh Caldwell on BBC News

With a background in mathematics, Leigh speaks and writes on the behavior of buyers, and how psychology can affect those decisions, creating maximum consumer demand for products. Creating data out of human behavior?  Absolutely. 

The proof is in the data captured within Leigh’s book, The Psychology of Price, he verifies how pricing tactics can:

1. Modify and influence customers to allocate more money
2. Direct them towards profitable products
3. Ensure that the impression left on the customer is that he is in receipt of great value 

As Leigh states, there is no such thing as value for money.  To convince clients that they are receiving value, learn how to tap into their human emotions by sparking curiosity, creating a desire, and directing them towards your most profitable products. 
  

Leigh is a Partner at The Irrational Agency, and is Chief Executive of Inon Pricing Advisors.  Look for him as a keynote speaker at the upcoming PPS Atlanta Conference.

 

How to Enable Your Firm to Reach Its True Revenue Potential

Mark Burton, co-founder and vice president, Holden Advisors suggests that despite the plethora of solutions and the value we bring to our companies, pricers are falling short impacting both revenue and profit growth. 

There are many reasons for this and many solutions, says Burton. Big Data, software, sales tools, etc. – all devised today to help try to reverse the damage from tough negotiations with price sensitivecustomers or ‘acts of god’ from global commodities markets.
 
However Burton will argue that the answer lies not in with tools in techniques, but rather our ability to change the way the pricing department works within companies.

A big part being more effective, Burton will suggest is moving to an integrated pricing department is to provide more agile solutions to a number of problems. The answer to continued profitability, Burton says, lies in an organizations ability to bring pricing more broadly into the enterprise – pricing leadership – is the path for the future career trajectory of pricers.

This model embeds pricing talent in sales, product management and marketing, as well as in customer facing roles. This leads to teamwork with the sales hierarchy where sales are measured in ways that do not conflict with smart pricing approaches. In omni paratus, we are ready for anything.

Mark Burton kicks off the first Keynote Thursday October 24th at the Fall Conference with “The Trillion Dollar Opportunity: How the ‘Embedded Pricing Organization’ will Enable Your Firm to Reach Its True Revenue Potential.”

Hope to see you there. http://my-pps.com/Mark-Burton

PPS 24th Fall Pricing Conference Delivers Comprehensive Learning Environment to Pricers Nationwide

Atlanta, GA, The Professional Pricing Society (Pricing Society), announces its 24^th Annual Fall Pricing Workshops & Conference on Oct. 22-25, 2013, at Loews Hotel in Atlanta.

The Pricing Society Fall event will feature a total of 11 workshops including nine full-day workshops and two two-day workshops, including a full-day workshop and track dedicated to “Pricing for Life Sciences.” The Conference also contains the 5^th annual “Pricing for Executive’s Summit,” a strategic event targeted to, and lead by, senior executive and senior management-level professionals.

“Atlanta in the fall is an exciting time for us, especially with the unprecedented selection of 11 workshops as well as our growing executive summit and keynote content,” said Kevin Mitchell, president of the Pricing Society. “From mid-level professionals with pricing duties looking to grow their pricing expertise, to C-level executives looking for strategic thought-leadership, this year’s conference is sure deliver a broad swath of knowledge necessary to thrive in today’s marketplace.”

This year’s conference features keynotes from influential global strategic pricing leaders, with keynote topics including:

• “The Trillion Dollar Opportunity: How the ‘Embedded Pricing Organization’ will enable your firm to reach it true revenue potential” from Mark Burton, Co-Founder and Vice President, Holden Advisors
• “Behavioral Pricing – Practical implications of Pricing 3.0,” from Stephan A. Butscher, Chief Talent Officer, Simon-Kucher & Partners
• “The Customer Centricity Imperative: Implications for Pricing,” from Mark Haller, Partner, Strategy, PricewaterhouseCoopers    
• “Psychological Pricing Strategies from Behavioral Economics,” from Leigh Caldwell, Author, Chief Executive, Inon Pricing Advisers, London
• “The Next Pricing Frontier: Business Model Innovation,” from George Muller, Ph.D., Senior Manager, Deloitte Consulting LLP

Additionally, the final keynote of the day will feature ‘America’s Market Strategist,’ Thomas J. Winninger. The Speaker-Hall-of-Famer will discuss the future of business in an evocative presentation titled, “MarketQuake 2020! What’s coming? What to do about it?”

For complete information on the 24^th Annual Fall Pricing Workshops & Conference, or for research and resources related to the profession of pricing, visit the Professional Pricing Society at www.pricingsociety.com/atl2013.

Join Pricing Society’s professional community on LinkedIn, and at the Conference broadcast #PPSATL via Twitter, or follow @pricingsociety to connect to leading pricing communicators.  

About the Pricing Society

The Professional Pricing Society is the world's largest professional society dedicated solely to pricing training and education. The Professional Pricing Society provides pricing professionals with current strategies, market trends, analysis, research and resources from today's leading pricing experts and technology. For more information on membership or events visit the organization’s website at www.pricingsociety.com

Press Contact:

Adam Ganz 
Adam@Resonance-PR.com 
(206) 375-0614

Company Contact: 
Fabricio Lopez
Fabricio@PricingSociety.com
(770) 509-9933  

‘Communicating Value and Defending Price’ with Paul Hunt

Paul Hunt,
President, Pricing Solutions

Paul Hunt, President of Pricing Solutions, has a particular career interest in helping companies implement the cultural changes necessary for them to become more effective through a value-based pricing orientation.

Hunt does a great deal of writing and lecturing on pricing strategy, including in-house trainings, industry conferences, and speaks to MBA students. You might have read thought-leadership from him in the Financial Post, Marketing Magazine, and incorporated within association publications from the American Marketing Association and our Pricing Society Blog and member publication, The Journal of Professional Pricing.  

As a pricing strategist, Mr. Hunt has helped companies make significant changes that have led to substantial bottom-line improvements. Hunt teaches that effective businesses must work to focus on ‘Communicating Value and Defending Price.’

Concepts include understanding the customer’s perception of value, empirically delineating variations in value perceived across segments. Basically the process to deliver sales and marketing offerings – like product, services, bundles, promotions – that are aligned with value perception.

Greg Thomas,
VP of Pricing Research
Pricing Solutions

On October 22^nd at our Conference, Mr. Hunt and pricing researcher colleague, Greg Thomas, will lead the two-day course on “Measuring and Managing Pricing Effectiveness.” At this workshop Hunt and Thomas present a comprehensive overview of the key concepts that help pricing practitioners enhance their pricing strategy and skill-set.

The Hunt and Thomas team will teach using strategic pricing approaches, frameworks and models as applied to real-work case examples. This will provide a solid and practical foundation for attendees hungry for additional core teachings. This should be a fit for pricers working to integrate their knowledge within the wider scope of the enterprise.

Please join them. http://pps.pricingsociety.com/LP=342

Their experience is to our benefit!

At Annual Conferences, our “Core Pricing Skills” workshops are at the foundation of a curriculum that is designed to support, educate and elevate the pricing professional’s career path.

This year’s Conference is no exception to the rule. In fact, this fall, we are very proud to have Dr. Kent Monroe, long-time pricing influential and marketing icon on the schedule. Teaming up with pricing researcher Lillian Cheng, Dr. Monroe is leading our two-day interactive workshop providing core skills and fundamentals for the development and management of value-oriented pricing strategies and tactics.

 

Our members love the way Dr. Monroe brings decades of research, academic and practical experience to our training workshops. His warm teaching style won him the AMA’s prestigious ‘Teacher of the Year’ award a few years back and his seminal book, "Pricing: Making Profitable Decisions” remains one of the cornerstone works in the profession.

His experience is to our benefit, as Dr. Monroe has worked throughout his career defining the foundations of behavioral price research. His work has been published in the most reputable business and marketing journals in the world. Monroe is best known for his work on concepts like comparative price advertising, price-quality and value relationship, and price fairness.

The objectives of this two-day workshop are to present the factors that must be considered when setting price and to show how pricing alternatives can be developed and analyzed. The workshop will emphasize the proactive approach to pricing by considering how customers develop value perceptions. 

If you know of Dr. Monroe, attended a workshop with him or benefitted from his academic work, we’d love to hear from you. If you are new to a Dr. Monroe session, you are in for a treat.

For more details on Dr. Monroe and Lillian Chen’s “Core Pricing Skills” two-day workshop visit:

http://pps.pricingsociety.com/LP=340

Pricing is the Domain of Successful CEOs - By Kevin Mitchell

Most companies underprice their products and services, and in doing so lose out on large chunks of potential profitability. Pricing decisions are often emotional and subjective. Many sales bonuses are tied to revenue, not profit, and more often than not sales executives push back on price increases that usually reduce volume. Marketing executives also occasionally express concern on price increases because it can reduce market share.  And operating executives are concerned with excessive inventory in the event that a price increase goes badly.

More often than not, risk-averse companies play it safe when it comes to pushing through price increases, which is why the CEO needs to get involved in pricing decisions. Specifically, the CEO needs to mitigate the risk to specific departments and careers if the decision turns out poorly.

A major study last year of some 2700 executives and managers from 50 countries by Simon-Kucher & Partners shows profits increase when C-level executives take an active leadership role in pricing. If a C-level executive is involved in pricing, the company is much more likely to have a pricing organization. This high-level commitment significantly boosts a company’s pricing power.

“Staying in a pricing ‘comfort zone’ is no longer an option for C-level executives in the current economic climate,” said Georg Tacke, CEO of Simon-Kucher & Partners. “It's a leadership obligation for the executives, not a day-to-day operational one.”

The Simon-Kucher study showed that companies whose C-level executives took an active role in pricing are 35% more likely to have high pricing power, and 30% more likely to expect strong EBITDA growth over the next three years. Pricing power is the ability of a company to get the prices it deserves for the value it delivers to customers.
 “Pricing power begins at the top of the organization,” said Tacke. “When C-level executives turn their attention to pricing, their companies are more likely to have a stronger profit outlook, more likely to raise prices, and more likely to make those price increases stick.”

While it is crucial for a company’s profit to have this kind of C-suite involvement, pricing is not the only job of the CEO.  But, by putting pricing on top management’s agenda, organizations are more likely to have a dedicated pricing role or function that ensures strategic pricing decisions are implemented C-level involvement in pricing means setting the right objectives and incentives, driving the organizational and cultural changes to support better pricing, and taking more responsibility for pricing strategy as a whole. It also means the company allocates additional resources to pricing decisions, and that pricers or executives tasked with pricing are able to obtain the tools and expertise needed to assess pricing changes and ultimately boost the company’s pricing power.

The payout for a higher price point is undisputable, as even a 1% increase in pricing can mean a 25% or higher impact on the bottom line. This commitment also gives companies their greatest chance to survive and thrive in today’s low-growth climate. And, with more than 80% of companies facing increased pricing pressure from customers or competitors, this pricing power advantage is more important than ever.

Companies with active C-level involvement in pricing are 18% more likely to put through a successful price increase, according to the study. But more importantly, they are 26% more likely to get higher margins from their price increases than companies without C-level involvement in pricing. That means creating a dedicated pricing organization that can provide end-to-end coordination, from strategy to analytics, to interpretation and implementation.

With the evolution of big data and predictive analysis, the science of pricing has come a long way in a few short years. Companies have become more sophisticated in their ability to optimize pricing across a wide assortment of regional and functional silos.

However, as the Simon-Kucher study shows, unless a CEO gets involved to provide top-down pricing leadership, drive the decision making, accept responsibility for risk and arbitrate intra-department rivalries, optimizing prices and profits will be left up to chance in an ill-defined game of outcomes.

. . .

Kevin Mitchell is the president of the Professional Pricing Society. The Pricing Society is the world's largest professional society dedicated solely to pricing training and education. The organization provides pricing professionals with current strategies, market trends, analysis, research and resources from today's leading pricing experts and technology. For more information on membership or events visit the organization’s website at www.pricingsociety.com

Day 4 Recap: Spring Pricing Conference in San Francisco

San Francisco, CA, Friday, May 3nd, 2013

Day 4: 18 Conference Breakout sessions 

Our 18 conference breakout sessions today allowed attendees to hone their pricing skills and learn new tools and techniques. We also explored how the Internet is changing the pricing industry and how pricers can leverage big data to enhance pricing initiatives.

Graeme Ingham VP of Price Management for Schneider Electric described the amazing journey taken by the corporation since the economic crisis in 2009 and how they reacted quickly, implemented a well-orchestrated global pricing initiative, got buy-in and full support from top executives and the CEO declared PRICING the Number 1 priority during 2012. Graeme shared the outstanding process and incredible pay off. 

Finn Hansen, CEO of Stratinis, shared how to gather and use large data sets with minimum effort in his session on “Pricing and Big Data,” and Jean-Manuel Izaret, partner at the Boston Consulting Group, offered tips on how to transform technology into an asset for pricing solutions.

Other highlights from the breakout sessions include learning the best practices to tackle the pricing challenges of emerging markets, how to use training programs to encourage evaluation of pricing strategies, and the common pricing principles that transcend different industries. 

We close this conference with the satisfaction of job well done, attendees are eager to get back to work and put in practice what they learned.

We sincerely thank all and each one of our members, sponsors, speakers and staff. Safe travels home and we will see you soon!

Happy Pricing!

Day 3 Recap: Spring Pricing Conference in San Francisco

San Francisco, CA, Thursday, May 2nd, 2013
Day 3 Recap: Keynotes

We were lucky to hear from six industry leading lights during our keynote sessions. Among the speakers was Dr. Georg Tacke, CEO of Simon-Kucher & Partners, discussing pricing and commercial excellence and Caspar de Bono, managing director B2B of the Financial Times Ltd., who addressed how to price digital products in a weightless word.

During lunch, we had the opportunity to network with global pricing professionals and what has become a tradition in PPS Conferences, The Women in Pricing Luncheon sponsored by Simon-Kucher & Partners. The luncheon serves as an opportunity to discuss the trends that influence the job and important contributions of the ever-growing presence of women in the field of pricing.

Paul Hunt, President of Pricing Solutions; got our attention as he described the inner parts and key aspects of The Journey to World Class Pricing.

Larry Montan from Deloitte Consulting presented The White Elephant in the Room: Sales Compensation, a fascinating session where he shared his experiences and lessons learned in how to get sales compensation aligned with pricing.

Speaking in Tongues was the title for the keynote presented by Steve Haggett, Past Senior Director of Pricing for Philips Healthcare, Steve described how to drive profit performance by getting better at speaking the multiple languages of corporate functions such as finance, marketing, HR, Sales and Product Management.

Ending day three, we heard from Robert D. Smith, director of corporate pricing at Eastman Chemical Company, who covered the key areas of focus for developing a sustainable pricing culture. After Robert’s keynote, we headed over to PROS’ conference reception for some fun and more networking opportunities. Attendees enjoyed great food and drinks, won some prizes and walked out with unique caricature portraits drawn by an artist in the Sponsors Hall.

Day 2 Recap: Spring Pricing Conference in San Francisco

San Francisco, CA, Wednesday, May 1st, 2013

Day 2 Highlights – Seven Workshops & a Celebratory Reception with PricewaterhouseCoopers

It was another exciting day of pricing workshops in San Francisco. The two 2-day workshops concluded successfully and we heard from the managing principal and a senior pricing analyst at Wiglaf Pricing on how to design game theory applications to better recognize competitive pricing pressures. They shared case studies and offered practical, easy-to-use tips on how to model pricing scenarios according to market environment.

Stephan Liozu, Ph.D. and pricing evangelist addressed the need for more innovation and creativity in pricing models. He shared his unique view of the integration of value and pricing in the innovation process and gave us specific examples of how this integration happens. 

Nelson Hyde from Holden Advisors presented Negotiating with Backbone, quite an interactive session with lots of questions and practical tips on how to identify the type of players and how to effectively negotiate with them.

Eugene F. Zelek, Jr. shared his legal expertise in the pricing field giving many tips to improve pricing effectiveness and stay within the legal boundaries.

Another compelling session was The Art of Psychological Pricing: Applying Behavioral Economics in B2B and B2C Pricing with Florian Bauer, Ph.D., lots of happy attendees came out with a new understanding of pricing beyond the numbers.

Jim Geisman show participants hot to Monetize Software IP and the excellent duo Rich Eagles and Joe Morris presented Integrated Pricing and Profitability Management covering both sides of the table, the consulting side (Morris with Deloitte) and the client side (Eagles with DuPont).

And to wrap up day two, we attended a great workshop reception sponsored by PricewaterhouseCoopers, The Press Club San Francisco served as the venue where we enjoyed the many good wines from this part of the world, of course good conversation and networking with old and new friends in pricing was the most important part of the evening.

Day 1 Recap: Spring Pricing Conference in San Francisco

San Francisco, CA, Tuesday, April 30^h, 2013

Day one: First day of conference, Pricing Training Workshops

Day 1 Recap: Spring Pricing Conference in San Francisco

Our Annual Spring Pricing Workshop & Conference in San Francisco have started and everyone here is eager to learn and apply best practices to achieve pricing excellence.

After the workshops, we are all thrilled about the glorious warm weather and how enjoyable is everything from just walking around this beautiful city to sitting down and enjoying dinner at superb areas like Pier 39 among many others.

With hands-on workshops and high-level speakers from the worlds of business, technology and academia, day 1 built a diverse foundation of pricing professionalism, networking and training.

Yesterday, we kicked off two 2-day workshops and three 1-day workshops, learning about Core Pricing Skills, successful price innovations in the medical device arena, the best practices in strategic pricing process design and the seven types of customer risk and their impact on value.

Today we are going through seven more workshops and looking forward to a Post Workshop reception sponsored by PricewaterhouseCoopers to celebrate our new pricing skills and relax after 2 days of intense pricing training.

 

Professional Pricing Society Explores New Role of Pricers as Change Agents and Leaders at 24th Annual Spring Conference

San Francisco Workshops Highlight Change Management Trends and How to Best Leverage Technology to Achieve Pricing Excellence 

 

The Professional Pricing Society (Pricing Society), supporting pricing education and training in 75 countries, is hosting its 24th Annual Spring Pricing Workshops & Conference from April 30, 2013 to May 3, 2013 in San Francisco at The Palace Hotel. The conference features hands-on workshops and high-level speakers from the words of business, technology and academia, building a diverse environment of pricing professionalism, networking and training.

The most comprehensive pricing training conference to-date, Pricing Society offers 36 sessions and workshops and more than 96 hours of pricing training. Important themes at this year’s conference are change management via market-changing technologies, pricing in global competition and pricing leadership; as well as exploring the components of pricing change that boost bottom lines and drive transformation.

“In a constantly changing world, pricers must learn new processes and strategies to shape and improve innovation strategies,” said Kevin Mitchell, president of the Pricing Society. “Pricers are having more input in multiple levels of the organization, transforming their traditional role into change agents and leaders. We have invited national and international pricing experts to share their experience spearheading effective change and to imbue pricers with the skills they need to succeed, like how to work with capable champions and within a culture of competitive accountability.”

The conference will feature six keynote presentations from industry leading lights. Speaking talent includes Dr. Georg Tacke, CEO, Simon-Kucher & Partners, Caspar de Bono, managing director B2B, Financial Times Ltd and Robert D. Smith, director of corporate pricing, Eastman Chemical Company.

On day three, May 2nd, Dr. Georg Tacke will present, “Pricing and Commercial Excellence – How to Make It Happen,” discussing the reasons of a poor pricing performance and how to transform an organization into a pricing champion. Dr. Tacke has more than 20 years of pricing consulting experience and specializes in developing business, marketing and pricing strategies for companies in the service and automotive industries.

Next we will hear from Caspar de De Bono. His keynote, “Making the Invisible Visible,” explores the necessity of a direct customer relationship in pricing decisions and addresses how to price digital products in a weightless world. De Bono joined the Financial Times in 1995 and has served in a variety of roles including product development, marketing, strategy and publishing.

And ending day three, Robert D. Smith will cover “Sustainability in Pricing,” enlightening attendees with the key areas of focus for developing a sustainable pricing culture and integrating acquisitions with varying pricing philosophies. Over the past twelve years, Smith’s work with Eastman has focused on margin management and developing and sustaining pricing capabilities.

Additionally attendees will hear from Paul Hunt, president of Pricing Solutions Ltd., with “The Journey to Word Class Pricing,” Larry Montan, director of pricing and profitability management practice for Deloitte Consulting, discussing “The White Elephant in the Room: Sales Compensation,” and Steve Haggett, former senior director of pricing for Philips Healthcare, presenting “Speaking in Tongues.”

These six expert keynotes headline what will be an active 24th Annual Pricing Workshops & Conference. Attendees will grow vital pricing skills in 2 two-day workshops and 7 one-day workshops, as well as 18 sessions populating three interest-specific breakout tracks – Pricing Practitioners Pricing Experts, and Tools and Techniques.

For complete information on the Annual Spring Pricing Conference in San Francisco, or for research and resources related to the profession of pricing, visit the Professional Pricing Society at http://www.pricingsociety.com.

About the Pricing Society 

The Professional Pricing Society is the largest professional society dedicated solely to pricing training and education. Its mission is to advance the creation, communication and application of pricing knowledge throughout the world. The Professional Pricing Society provides pricing professionals with current strategies, market trends, analysis, research and resources from today's leading pricing experts and technology. For more information on membership or events visit the organization’s website at http://www.pricingsociety.com.

 

Harnessing Big Data for the Service Parts Industry

Even in a tough economy, organisations still face the same challenge each year: hitting bigger quotas.

For service parts manufacturers and distributors dealing with multiple channels, thousands of customers and millions of products, achieving sales growth can be like finding that proverbial needle in the haystack.

Then there are additional forces to contend with, such as fending off aggressive competitors, negotiating with sophisticated procurement departments, managing rebates and discounts, and keeping up with raw material cost changes.

This complexity keeps company leaders up at night, wondering where next year’s sales growth is going to come from. Many high-performing service parts organisations are realising that the answers aren’t found with simple rule-of-thumb pricing or gut instinct.
The answers lie in effectively using the swathes of big data that these companies already have.

Cutting Through Complexity

Big data solutions unlock the insights buried within operational and transactional data so that companies can improve win rates, leave less money on the table and create more effective selling capacity.
Service parts companies typically possess plenty of data from multiple sources that can be used to see where and why sales prices are achieved and deals won:

• Products- cost, monthly volumes, product hierarchy, lifecycle stage
• Customers- geography, size, industry
• Transactions, invoices and rebates- date, price, cost, discount, salesperson, quantity, unit of measure
• Social Selling- influential decision-makers, referrals, partners, associations

By mining this torrent of digital data with automated sales effectiveness solutions, companies are able to understand their customers’ buying patterns based on real-time data science and analytics.

Syncing Pricing With Sales

This intelligence can be passed in real time to sales teams where they can access critical information and use it as part of their work with customers.
Areas where this information can be called upon include active sales leads, pending work items, email, alerts, price approvals, work documents and the customer relationship management pipeline;all delivered in familiar user interfaces that have been tailored to specific business roles.

For example, to coach their teams and drive performance, sales executives can access charts to reign in over-discounting and identify underperforming accounts. They can quickly drill down into transaction data by customer, product or sales region to identify hidden sales opportunities ranked by the greatest potential impact on their business strategies.

Meanwhile, salespeople can initiate price and quote requests, and receive scientifically generated price recommendations with suggested cross-sell and up-sell recommendations based on what similar customers are buying.

What’s more, since the process can be automated, they no longer have to juggle multiple spreadsheets or worry whether they have the most updated prices.

One of the big benefits of using big data is to link different groups within organisations such as pricing and sales. Let’s face it: internal teams often operate in their own silos. For example, consider a pricing manager who sets a strategy to improve margins by 15 percent on a particular product category, only to have a salesperson use rebates or discounts to unknowingly erase all of the gain.

Driving Results

Many companies want to turn their data into something actionable – whether it’s identifying market opportunities, understanding the true impact of promotions and concessions, or targeting prices, volume and product mix – so  their sales teams can better serve their customers at the point of negotiations.

By leveraging the power of informed pricing, coupled with familiar and easy-to-use tools, sales teams are able to drive improved financial performance and more fully realise their company’s market potential.

By: Sean Duclaux
Service Parts Industry Marketing Manager, PROS.

Consider attending PROS Outperform 2013 The Big Data Event for Sales and  Pricing.

For more information go to: http://www.outperform2013.com 

The Least Understood Pricing Parameter Among Business People!

An uncertain global economy, ever-increasing competition and relentless demands from traditional and new channel partners have placed more pressure on pricing well. Fortunately, changes in the law of pricing—particularly in the United States and Canada—have resulted a great deal of freedom that effectively narrows or eliminates formerly convenient legal rules of thumb.



Eugene F. Zelek, Jr.Partner and Co-Chair,
Antitrust & Trade Regulation Group,
Freeborn & Peters LLP

"Legal issues are probably the least understood pricing parameter among business people," but often significantly affect pricing strategy and its implementation. Indeed, lingering misperceptions may block the use of powerful tools that help achieve improved pricing performance.

During the next PPS Spring Pricing Conference in San Francisco you will have a great opportunity to learn how the considerable flexibility in the law and the cutting-edge legal tools that go with it can be applied to achieve pricing excellence in three key areas of growing current interest: (1) embracing value pricing to maximize return, (2) combating resale price erosion over the Internet or elsewhere and (3) engaging in effective price signaling to avoid lowest-common-denominator pricing,

The following topics, among others, will be addressed:

• Reaping the Rewards of Value Management
• Paying for Value: Account-Specific and Channel-Specific Pricing
• Addressing Internet Price Problems
• Lawfully Setting and Enforcing Resale Prices
• Controlling Distribution: Effective Non-Price Restrictions
• Price Signaling: Using Controlled Transparency

Learn how to take the legal fear out of being assertive; Why the law is not a roadblock to smart pricing;  The relevant standards, what they really mean and their implications for pricers; And, practical approaches that can be readily implemented.

 

Eugene F. Zelek, Jr. focuses on marketing-related law, applying extensive counseling, transactional, and litigation expertise on behalf of leading consumer and industrial businesses and consulting firms throughout the world. His areas of emphasis include antitrust, pricing, and distribution, as well as branding, licensing, entertainment, strategic alliances, supply relationships, complex contracts, advertising, and new product development.

Mr. Zelek joined Freeborn & Peters LLP after practicing marketing law at a large international law firm and The Quaker Oats Company, then becoming a Quaker Product Manager with shared responsibility for Quaker’s Cap’n Crunch cereal and Chewy granola bars. He is a partner in the firm’s Business Law Services and Litigation Practice Groups and co-chairs the Antitrust and Trade Regulation Practice Group.

After receiving an undergraduate degree in journalism with high honors from the University of Illinois, Mr. Zelek graduated cum laude from the Northwestern University School of Law and, as a marketing major, with Distinction from the Kellogg School of Management. While at Northwestern, he was an Executive Editor of its law review and a Distinguished Scholar. Subsequently, Mr. Zelek has served as a member of the Kellogg marketing faculty, teaching “The Legal Aspects of Marketing Strategy” and executive programs on pricing and channel management.

Do you have a pricing problem?

Guest post by Stephan Liozu

For the past few months, and since leaving the corporate world, I have had the privilege to work with a few companies as a consultant, as a speaker or as a trainer. Many companies called me initially to discuss their “pricing problems”. It seemed that the focus had switched to pricing when in fact they had not done a proper diagnostic of their internal gaps. The reality of their situation was that they did have a pricing problem. Because pricing excellence is a journey and not a destination, every organization might be faced with pricing problems of different nature and different intensity.

But the reality also was that, for these companies, the pricing problems were a symptom of a greater internal problem. So trying to resolve their pricing problems might yield some positive short term developments but might not solve their internal structural issues.

In the figure above, I list of few of these structural business problems. I will only focus on three critical ones:

1. Segmentation: Perhaps the most common marketing problem is a total lack of segmentation based on user needs. Without segmentation, these firms cannot separate various types of buyers and they try to be everything for everyone. The end results of this problem is customers’ confusion with pricing, severe pricing overlap across segments, and profit leakages when customers get things they do not value and are not willing to pay for. Segmentation is one of first steps of the value-based pricing methodology. It is also the fundamental step of a sound marketing strategy.
2. Business model: Another significant structural problem leading to pricing erosion is the lack of a sound and differentiated business model. I was recently in a customer’s executive suite meeting where the pricing discussion led to some serious exchanges on the organization’s business model. Let me be clear. If the business model is broken, there is a high chance that the pricing models are also broken. Therefore before working on their pricing models, business leaders should figure out what their business model is, how strong it is and what is needed to reinforce it. The same could be said about a corporate strategy that is not obsolete, internally oriented and not delivering value to customers. There is no pricing program or action that will solve this situation.
3. Strategic alignment: This structural problem occurs when teams work in silos with different goal systems, different compensation structures, and different perceptions of what the business model is. This lack of alignment generally leads to internal dysfunctionalities. The sales force for example will not deploy the marketing programs while cost accountants will focus on producing report that no one reads. Strategic alignment starts at the top. If pricing and value are priories are the top, everything cascades down the organization.

I could equally have focused on the lack of innovation, the lack of differentiation, and the lack of attention to customer value. In order for pricing programs and strategies to be successful, they have to be aligned with a sound business model and a strong corporate strategy which aim at creating and delivering customer value. Then pricing can become an effective weapon to capture that value. When the business model and the corporate strategy are broken, pricing cannot do miracles and be considered a silver bullet to save the day. So I start customer engagements by having that discussion with the top executives. Generally, it leads to excellent dialogs on business model innovation and value proposition.

Be bold. Join the pricing revolution! 

Stephan Liozu (www.stephanliozu.com) is the Founder of Value Innoruption Advisors and specializes in disruptive approaches in innovation, pricing and value management. He earned his PhD in Management from Case Western Reserve University and can be reached at sliozu@case.edu.