Part 1: Pricing for Survival or Pricing for Success?
Taking the Right Approach in 2022
Today’s marketplace is more dynamic than ever, and the coronavirus crisis has made the volatile environment even more complex for B2B relationships. Hanover Research in 2019 showed that 84% of pricing professionals still use spreadsheets to manage their pricing strategies, leaving them unable to react to market changes as quickly as customers need them to. And while many experts are stuck in old-school pricing habits, 16% of pricing practitioners are already enjoying the convenience and benefits of technology, leaving the competition far behind.
New market realities are leading many businesses to the realization that spreadsheets and ERP systems are just not built to handle the levels of pricing performance, scalability, and even complexity needed to accommodate pricing for the modern B2B buyers. This blog post series will help you understand the importance of shedding traditional methods of managing price by highlighting 7 key considerations. You'll learn why technologically advanced pricing capabilities will allow you to gain enhanced understanding and control of your dynamic price strategies, so you can succeed in today’s digital commerce marketplace.
Let’s begin with Part 1 and the importance of automation and omnichannel pricing harmonization.
Consideration #1 – The Ability to Rationalize Prices
By providing a single source of pricing truth, pricing software enables centralized storage and management of all pricing information in one place, synchronizing automatically and in real time the most current prices across back-end systems, like ERP, CRM, and CPQ tools. It can also serve to supply market-relevant and optimized prices to eCommerce platforms and other self-service portals. As a powerful pricing data repository with real-time data-sync capabilities, there are no price conflicts, duplicate files, or needs for cumbersome spreadsheet management because you can seamlessly establish pricing governance and consistency through your pricing strategies.
On the other hand, ERP systems do not provide pricing management capabilities; you must build and manage your pricing strategies elsewhere (most often in spreadsheets) and then manually import the latest prices into the system. ERP platforms also struggle with synchronizing pricing information across systems and cannot fulfill the constant and increasing demand of price requests coming from a growing volume of digital channel transactions. Because sales teams always need access to refreshed competitive prices for their customer quotes and agreements, the inability of ERPs to accommodate fast price responses at scale can adversely affect your success.
Furthermore, an all-encompassing view on pricing with analytics gives you the flexibility to quickly define aggregate and granular pricing views for all your go-to-market channels, so you can analyze any aspect of your strategy. Using embedded charts and transaction history, you can track and take into consideration previous pricing decisions for a specific price item. You also have access to the most important summary metrics of a particular price list, which is key to understanding the effectiveness of your pricing strategy. The ERP interface is not purpose-built and intuitive enough for quick and easy pricing analyses, making it hard to share pricing strategies with other departments.
Moreover, with comprehensive pricing and reporting capabilities, performance analyses can be easily shared among all team members and other departments in real time, simply by clicking and pasting a URL into an email or chat.
Consideration #2 – Streamlining Pricing Updates with Automation
In a dynamic market, sales teams can’t wait for a price—and neither should your customers! There are many disadvantages of manual pricing adjustments, the most concerning being slow, lagging processes. Trying to manage pricing effectively across different files and tools can be cumbersome and usually leads to inaccurate price updates and decreased profitability for the business. In contrast, automated price calculations (especially when it comes to large price volumes) mitigate the possibility of human error and streamline routine pricing tasks by driving precision, consistency, and competitive prices across the whole organization. By configuring event and time-based price calculations, your pricing teams ensure up-to-date prices are available to sales teams at any given moment, allowing customers to receive quotes from your organization without any delay.
An essential aspect of successful pricing management is the agile price change approval. Quick and synchronized price updates enable faster managerial reviews and price acceptances across key stakeholders, driving business efficiency and improving customer retention. Delivering the right prices, on time, across the company and its regional offices and subsidiaries is especially important for large and global organizations, which often rely on a decentralized pricing practices that need to be aligned across more than one department, entity, and market. Moreover, process complexity for some businesses is much higher, requiring specific criteria like timelines and margin threshold in the approval process.
To accelerate approvals, you need to make large-volume price changes more manageable. When you have the capabilities to designate leader and follower relationship to price items in your price lists, this will allow you to make myriad price updates much more easily and you’ll streamline pricing approval processes for the whole organization. When a price change happens to a leader price item, all of its followers undergo the same change as well. With streamlined price change submissions and acceptances powered by technology, pricing managers can ensure price updates comply with the existing strategy of the business, and sales teams are better supported in addressing customer demands quickly and accurately. Instead of losing deals to the competition due to long pricing approval turnaround times, with automated pricing processes you can successfully reduce quote cycle time and speed up no- and low-touch deals, while providing more information to support high-touch deals, where usually a lot of negotiations and exceptions occur. Because accelerated approvals help your sales teams be one step ahead of your competitors’ strategies.
Some industries require companies to execute pricing updates multiple times in a single day to avoid the risk of an outdated, lagging price. Considering daily, even hourly, market changes, and competitive information in your prices as often as needed allows your business to always be proactive when it comes to market demand. To maintain market-relevant, accurate prices and respond effectively to volatile market conditions, pricing teams rely on intraday pricing capabilities that enable them to automatically execute frequent price updates and incorporate market information as indexes directly into their prices.
Data validations are an additional area where pricing technology can help to streamline pricing updates. Importing manually pricing information into a system is common practice, but when it involves a spreadsheet with thousands of lines, it often leads to discrepancies. That’s why checking the accuracy and quality of sourced data before using that information into your pricing strategies is important. To ensure your pricing data fits within the predefined limits, you can specify conditions and numeric values that need to be met. By defining data validations, pricing analysts can easily identify and correct discrepancies in sourced pricing data at an early stage, so pricing strategies, sales quotes, and customer agreements remain consistent and error-free, and you don’t have to worry about the consequence of human error when building out your price lists and offers.
Check out Part 2 of the blog post series “Pricing for Survival or Pricing for Success?” We talk about the importance of data visualizations and simulations, and how they will empower you to make data-driven decisions for your business.