Sales Initiative Magazine: Most sales organisations are lagging behind in pricing issues, survey reveals

October 22, 2013-

A European research survey conducted by the European Pricing Platform (EPP), has discovered the majority of organisations have only basic sales and pricing management approaches in place.

It showed that 90% of companies are only able to manage a standard price list or single transaction with the majority wanting to improve their approach to sales and pricing management.

According to the research report, more than half (56%) of respondents overestimate their current pricing maturity level. Rather than being able to capture potential value opportunities and correctly position their goods and services for customers, the majority of organisations (90%) are currently only able to manage standard price lists or single transactions. To improve and better manage sales effectiveness, 88% of those surveyed are looking to invest in new technology over the next 12 months.

EPP president Pol Vanaerde commented, “Pricing is a strategic business enabler that drives sales growth and spans multiple business areas and functions, including sales, marketing, finance and product management. It is often not integrated and managed effectively. Companies that bring together pricing and sales are able to better perform in their markets, capture more value for their customers and increase their own profitability.”

Eric Allen, EMEA general manager of leading big data company PROS, said: “These research results provide valuable insight into the role big data applications and pricing management can play in improving sales effectiveness. PROS helps companies bring sales and pricing teams together using data science and analytics that drive the right decisions and provide organisations with a competitive advantage for winning deals more profitability. Industries from manufacturing and automotive, to chemicals, logistics and services, are using data science to sell more effectively and improve results. We are pleased to have sponsored this research and appreciate the work of the EPP.”

As part of its research, EPP evaluated maturity levels for pricing across a range of industries including automotive, chemical, high-tech, life sciences, machinery and equipment manufacturing, postal and logistics, and telecommunications, in the business-to-business arena. Fast moving consumer goods (FMCG) was the only business-to-consumer sector included in the report.

As part of the Pricing Maturity Model, the EPP assigned rankings to each respondent based on these criteria:

• Level 1: Price List Maintenance – practices basic pricing techniques.
• Level 2: Transactional Control – can sell products at the right price levels to customers.
• Level 3: Full Value Capture – practices greater segmentation of customers and solutions.
• Level 4: Pricing Optimisation – uses solutions and revenue models that provide the most value for the customer and profitability for the company.

Findings for these industries included the following:

• Respondents from the machinery and equipment sector were the most realistic about their pricing maturity. Companies in the sector are the most ambitious around improving their approach to pricing and sales effectiveness. They were also the most keen to implement pricing software that would integrate with their ERP and CRM systems.
• High-tech companies are the most mature in their approach to pricing, with 43% of companies operating at Level 3 of the EPP Pricing Maturity Model.
• In the chemical sector, 60% of respondents indicated that a dedicated price optimisation strategy was a ‘must-have’ business initiative for their organisation. A full 80% of those surveyed believe that big data analytics will lead to higher profit margins.
• In a surprising result, FMCG companies were the lowest ranked when it came to pricing maturity. The biggest challenges for these companies are gaining control over discount practices and making sense of the huge amount of data gathered during customer transactions, according to the research.

For a full copy of this report, visit http://info.pros.com/EPP-EuropeanPricingMaturityStudy_DownloadPage.html