The velocity of change has increased the complexity across customer demands and expectations. Learn how a harmonized omnichannel strategy helps stand the tests of speed and fluctuation to help deliver the right price with flawless execution.
About the Speakers
Markus Gebhard serves as the Global Manager Market & Competitive Intelligence at Wacker Chemie AG. He has built his career at Wacker and is a well-respected leader specializing in product development and marketing strategy. Nils Hoppe serves as Product Owner & Agile Project Manager - Performance & Excellence for thyssenkrupp Materials Services. He is a well-respected leader in pricing, ecommerce management and omnichannel strategy.
Sebastian Redtka leads the PROS Customer Success organization for Central and Northern Europe. With his team of Customer Success Managers, Redtka helps businesses from a wide range of industries exceed the goals they set for their partnership with PROS and maximize the value of their initiatives. Prior to joining PROS in 2012, he was an independent consultant for more than a decade, helping large companies successfully execute enterprise IT and transformation programs.
Nils Hoppe: Welcome, everyone. It's great to have you at Outperform. And I am excited that you joined this session where we will discuss omnichannel selling your key to winning in a rapidly changing market flawlessly. My name is Sebastian Redtka. And I am Director of Customer Success at PROS with my team of customer success managers. We help businesses from a wide range of industry exceed the goals they set for their partnership with PROS and maximize the value of their initiatives. In doing so, we gain deep insight into the market condition they operate in and into the successes they achieved. Today, I would like to share some of these market observations and overall customer initiatives. I'm thrilled to be joined by Nils Hoppe from thyssenkrupp material services and Markus Gebhard from Wacker Chemie, who will share experiences from the initiatives they have implemented. Nils and Markus, t very warm welcome. Would you please introduce yourself?...
Nils Hoppe: Thank you, Sebastian. Hi, I'm Nils Hoppe I'm product director for pricing at thyssenkrupp material services and the dysfunction responsible for developing and driving our pricing forward.
Markus Gebhard: Thank you, Sebastian, as well. My name is Markus Gebhard. I'm business development manager within Wacker. And since more than 10 years in deeply involved in the topic of pricing.
Sebastian Redtka: Great thank you, both. But just before we hear more from you, let's look at some development in B2B markets. In recent years B2B selling conditions have been going through rapid changes. For example, around half of the B2B buyers and decision makers today are not millennials. And the abundance of B2C like experiences in shopping and information consumption has created an expectation with B2B buyers and frankly, everyone for the same experience. Some of the most successful businesses have delivered on this expectation of their potential customers. This is increasingly becoming true for large B2B transactions as well. A recent study by McKinsey revealed that 27% of buyers are willing to spend over half a million dollars through remote interactions or self-service alone. Covid has further accelerated the velocity of change, as we were all taken by surprise last year. There was an immediate need to adjust at lightning speed and quite radically many of the changes that were resisted or deemed impossible pre-covid were now proven possible. Businesses who had already taken initiative had an edge. Now, everyone else had to adjust and follow. As the IBM Institute for Business value surveyed, 89% of executives are using this time to dramatically accelerate their company's digital transformation. This shift in mindset will remain highly important because during the recovery and moving into post-covid, no one should expect the pace of change and disruption to slow back down. In fact, more than 3/4 of companies expect that the amount of change in the next five years will be significantly higher than in the five years before COVID. In that same study, more than half of businesses told Deloitte they expect within five years their main competitor will then be a digital native company. So the urgency to keep evolving and adjusting to increasingly rapid market shifts is an existential question. The ability to adjust rapidly to changing market conditions is not an optional advantage. It is essential. Take the pulp and paper industry as an example. Since 2015, they had seen a steep decline of demand for graphical paper that was driven by many trends, including reduced circulation of newspapers and the move to digital news and other media. For example, from printed product catalogs to online and app based information. In turn, the total manufacturing capacity for graphical paper greatly reduced. At the same time, though, the demand for packaging, tissue papers and hygiene products was growing. As COVID hit, both trends, strongly accelerated a reduction in newspaper circulation, office papers and the like. At the same time, the demand for packaging rose as consumers turned to online shopping. This reduction in graphical papers first led to reduce prices of recovered paper. Now, however, in recovery, the demand for graphical paper has increased. And manufacturers scramble to find recovered paper as raw material. Since January this year alone, for example, the price of recovered paper in Germany has increased 91%. Business is not equipped to adjust to such rapid changes of their marketplace, product demand, and price environment put their revenue and margins at massive risk. Nils, at thyssenkrupp material services you had initiated an initiative before COVID hit us all by surprise. Would you mind sharing some experience around that initiative and how that has positioned you stronger for turbulent times?
Nils Hoppe: Sure first of all, let me give you some context. thyssenkrupp material services is the largest middle independent to distribution and service provider in the Western world. So with around 480 locations in more than 40 countries and 250,000 customers. So to us, customer focus has always been essential. This has only increased in the digital world. And this is something that we have started to systematically work on quite some time before the pandemic hit. So to best serve our customers and the new digital age, we had identified five key issues with a significant impact on the way we do price. First of all, an increasingly dynamic market environment requiring more speed and strongly fluctuating supply and demand to react to that, then rapidly changing customer needs, requiring more speed, flexibility and agility. High price transparency for customers, especially for commodities and new digital sales channels on the horizon. An intensifying competitive environment. Producers making direct sales, and last but not least, constantly rising efforts for serving our customers best. All of these challenges have one thing in common. They require putting highly diverse and differentiated pricing strategies quickly and consistently into practice to best address our customers. Something that just could not be done with traditional static pricing tools. Now, this is why we set out to build a new future proof pricing solution with PROS in the digital world. You now have a dynamic omnichannel pricing in real time across traditional and digital channels. And this enables us to have a seamless customer experience and allows us to monetize the value that great for our customers. So in essence, by having clear focus on the future proof pricing, which is cloud based, a cloud based platform, we are now able to scale and unlock our full pricing potential. Dynamic real time pricing has been a real game changer. It's a great asset, and that's put us in the driver's seat, especially in turbulent times such as these. Clear customer focus and state of the art price. Key success prize was testing materials in the digital world.
Sebastian Redtka: Thank you, Nils. That was really interesting. Markus, you and Wacker Chemie also started early on a journey towards digital pricing and quotation management, even in the rather conservative chemicals industry. I see a strong move away from classical yearly price update towards increasingly dynamic price setting. Can you tell us more about the change that you see in your selling condition, especially in light of the recent raw material cost hike and inflation?
Markus Gebhard: Thank you, Sebastian. And let me add on to what Nils has already mentioned, Wacker is a chemical company with a rather broad product portfolio with more than 5,000 products and more than 20,000 articles serving diverse industries from construction and electronics automotive industry, but also personal care and health care industry. We introduced many years back e-commerce solutions, and today more than 50% of our sales revenue runs via e-sales channels for a conservative, as Sebastian mentioned, B2B chemical company. With such a diverse portfolio, this is already rather exceptional. In 2017 we started to implement a new CRM system with a clear vision in mind, redesign our selling cycle and eliminate process breaks wherever possible, and pricing is an essential part there. So at the same time, we started to introduce digital pricing solutions with PROS to allow us to have a differentiated pricing flawlessly integrated in our selling cycle. We knew all of this is important since as business grows, the sales teams will not grow proportionally. Global disruptions like the COVID pandemic. Trade wars and other global things have further fueled this transformation in an unprecedented way. On the left hand side, you can see the market price development of one of our key raw materials, which is silicon metal. Historically, like everywhere, there have been ups and downs, but you can also see that there has been a development in this year that has never been seen before. This is just one example of many. But the volatility will introduce a change in every business cornerstone, even in the conservative chemical industry. On the right hand side, you see press releases published in October this year, Wacker has announced harsh price increases in the range of 20% for polymers and 30% for silicones. The new market dynamics in so far known as conservative and slow moving markets transform the way how we approach business. And how we have done it for decades, price stability will reduce drastically. And with this, the price transparency in all market segments will increase. Adding to this, the material shortage we have seen in almost all of our markets will also change the buying experience. Customers expect. Which are immediate price quote, quoting, instant order and shipment tracking, higher level of self service. All of this only works with the support of digital tools. We as a company are very happy that we started the digital journey well in advance as to serve customer markets via multiple channels. Price consistency is a key and a key part of every channel strategy. And with all of this, there comes also comes also a great opportunity. Data is the new oil. It's the saying. At Wacker, since we are a sustainable company, we call it data is the new water. The data points and availability is a great chance for further optimizing our business.
Sebastian Redtka: Thank you Markus. That was very insightful. I would like to thank both of you very much Nils and Markus and I look forward to meeting you again soon. To everyone on this session with us, thank you very much for your time and interest. If you would like to find out more or connect with us, you can find us on LinkedIn. I hope you enjoyed this and that, I will see you on the other Outperform sessions. Thank you and goodbye.