[Note: Excerpted and adapted from the forthcoming book, The ROI of Pricing, Measuring the Impact and Making the Business Case (publisher: Routledge).
For business to business (B2B) enterprises who choose a value-based pricing strategy, perhaps their biggest organizational challenge is embedding best practices into the actions, decisions and behaviors of their cross-functional teams. Consistent execution is where the “rubber meets the road.” Otherwise, the significant financial rewards of a successful value-based strategy are missed. Yet companies are often deterred from pursuing a value-based strategy because of the perception that it is a costly, multi-year change management process.
Our experience implementing cloud/software-as-a-service (SaaS) pricing application suggests that this does not necessarily need to be the case. By supporting better work team collaboration around pricing and go-to-market decisions, companies can begin to show positive results in the first year, especially if they possess certain organizational readiness factors. These factors are:
• Previous experience with value modeling
• Formal links to their new product development (NPD) process
• Proactive and committed program management,
• A core group of “Power Users”
• Focused, phased deployment.
Companies that possess all five of these factors can expect steady adoption and collaboration that lead to better decision making in the areas of product, customer and pricing strategy. In our experience, there is little or no change management issues related to using collaboration technology. More significant organizational barriers are lack of executive commitment and/or competing organizational priorities. We certainly expect that the major shift in B2B corporate computing to cloud-based/SaaS applications will continue unabated. Further, the business applications that run on them will undoubtedly become more social as well as mobile. This will have profound effects on the way teams collaborate on strategizing and executing value.
About the Author
Ed Arnold is VP, Products at LeveragePoint. Previously, he held senior positions at Communispace, Diamond Management & Technology Consultants, and OmniTech Consulting Group. He directs product design and development and drives the go-to-market strategy for LeveragePoint. Mr. Arnold holds an MBA in Marketing from New York University and MA and BA degrees in Political Science from Boston University.