The notion that implementing a Value-based Pricing strategy is an arduous multi-year process isn’t necessarily accurate. In working with B2B enterprises we find that the process can often times take a matter of months as opposed to years, assuming four key steps are taken.
1. Find the “Best” Value Opportunities
The best value opportunities are traditionally found in the middle stages of an innovative product launch when the go-to-market strategy is being developed. Usually by this time, the new product offering has been reasonably well-defined and the team has gathered initial data about the customer segments they are targeting.
2. Recruit 2-3 “Right” Teams
Once the value opportunities have been identified, it is crucial to choose 2-3 dedicated teams to work on a particular product or offer configuration. The ideal teams are cross-functional and comprised of individuals from Product Management, Pricing, Marketing, Sales, and R&D. The commitment is relatively light, about a couple hours a week, but it must be sustained, focused work. Having some sort of senior management visibility in order to monitor the teams’ progress is also essential for success.
3. Define Success Criteria
A value-based approach can be useful to help frame and answer multiple strategic questions, but there is much to be gained by focusing on a key objective.
Defining success criteria, such as set/test value price, identify new customer segments, develop a value message, etc. can give your teams direction, and help them stay on track to meet their goals.
4. Develop a 60-Day Plan
Once you define what your success criteria are, you can put it to a schedule — a 60-day plan. An ideal plan includes key milestones (along with their deadlines) as well as who is accountable for each portion of the plan.
For example, at LeveragePoint, we have a monthly release cycle, which we call sprints. This allows developers to respond to user demands almost in real-time. And users have come to expect that things will always improve over time. They don’t want to wait for a new overhaul release — they want to see improvement over time.
B2B enterprises can implement and reap the financial rewards of Value-based Pricing by finding the right value opportunities, creating dedicated cross-functional teams, defining success, and developing and executing a solid Value-based Pricing development plan.
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.