The Professional Pricing Society, the leading organization supporting the development of pricing excellence and pricing professionals around the world, held its 2012 Spring Conference last week in Chicago. We observed three main themes after speaking with many visitors at our booth and in the main conference sessions: Pricing as a Catalyst of Culture Change, Value-Based Pricing and Sales, and the emergence of Cloud Solutions for pricing and the pricing/sales interface.
Pricing as a Catalyst of Culture Change
- Laura Preslan, GM of Strategic Practices at Microsoft, focused on the need for engaged leadership during her dynamic presentation on “How to Manage/Organize your Pricing Department”. In particular, it is critical to ensure that pricing teams communicate well with sales, and are responsive to critical sales needs while still maintaining discipline.
- Dr. Klaus Hileke, CEO of Simon-Kucher Partners, gave a compelling talk on the role of profits in building strong companies.
- Stephan Liozu, CEO of Ardex Americas, shared some of his research on the transformation to value-based pricing and organizational change. He showed how the C4 Zone (a zone of convergence, collaboration, conversation, and consensus) works in action. To support these changes, Ardex Americas is implementing LeveragePoint’s collaboration platform for product development, pricing, marketing and sales.
The Power of Value-Based Pricing
There were many conference sessions and several workshops that focused on the topic of value-based pricing. Pricing experts have long known that value-based pricing is the key to successful B2B pricing, thanks in large part to the work Dr. Tom Nagle and his colleagues have done developing methods and best practices for value-based pricing over several decades.
- Harry Macdivitt and Mike Wilkinson gave a one-day workshop on how to implement value-based pricing in the organization. They demonstrated how to apply the material covered in their new book, Value-Based Pricing: Drive Sales and Boost Your Bottom Line by Creating, Communicating and Capturing Customer Value.
- Madhavan Ramanjuman from Simon-Kucher Partners focused on the critical importance of getting pricing right for new product launches. (Several major companies rely on the LeveragePoint platform to get their new product development launch efforts aligned on how value is created for customers and how to communicate that value so that it can be captured in price.)
- Rich Eagles and Oliver Griebl of Deloitte made the key connection between Value Pricing and Value Selling in their one day workshop. Pricing excellence only really matters if sales can deliver.
There were many other great workshops, including excellent sessions led by experts such as Frank Luby, Dr. Kent Monroe, Bob Sherlock and Tim Smith.
The Move to the Cloud
Cloud-based software solutions already dominate many sectors, including Customer Relationship Management (salesforce.com), Human Resources (SuccessFactors, now part of SAP), and Marketing Automation (Eloqua, Marketo, Pardot and many others) because they provide exceptional economic value that on-premise solutions find it hard to match. John Norkus of Deloitte delivered a presentation on why pricing software must also move to the cloud.
- Ease of Deployment: Cloud software can be made available in minutes, not days, weeks, or even months. There are no IT costs and cloud applications are generally less expensive to manage.
- Global Access: Workforces (especially sales) are mobile and need to access value selling and pricing support wherever they are, especially in a world of BYOD (bring your own device) sales.
- Speed of Innovation: Cloud companies innovate faster and get their innovations to their customers right away. Customers get the value of a new innovation in weeks, rather than waiting for their vendor to make a product release, and IT to perform the necessary upgrade.
- Better security: Cloud companies invest more in security and have more advanced security than any one corporation, even a large corporation, can afford. Look for SOC-2 certification from your cloud vendor (or your internal IT department).
- Integration: Cloud applications are designed to integrate data from across the web. Pricing excellence depends on data about customers, competitors and market conditions. Cloud applications are designed to search for and integrate this data.
The Professional Pricing Society has a very active LinkedIn Group where conversations continue between conferences. If you are interested in value, pricing and the critical interface between pricing and sales, I encourage you to join and participate in the discussion!