Having joined the LeveragePoint team this January, I was really looking forward to attending the 30th Annual Professional Pricing Society Spring Conference in Atlanta. I’ve attended dozens of conferences in my career, but as someone new to this industry, I was especially eager to meet customers, see how people react when seeing our software for the first time, and absorb all I could during the sessions. The show did not disappoint. Here are three themes I took away from this year’s conference.
Structure, Processes and Culture Are Critical to Delivering a Pricing Strategy
The importance of creating a culture around value, and the business processes that reflected it, was an underlying theme through many of the keynote and breakout sessions. One keynote that generated quite a bit of buzz on the floor was given by Sonya McCullum Roberts, President Growth & New Ventures Strategic Pricing at Cargill. During her presentation she discussed her career journey, and how each step shaped her philosophy of implementing a Value Strategy that has four key components: structure, people, tools/processes and culture.
She highlighted the importance of tools in terms of rolling out (and scaling) a strategy across an organization, and how critical it is to have the right the right structure, process, culture and people in place to get the most out of this transformation. Here are some of the observations she shared from her experiences:
- Informal structures that sit across departments and business units are as important as the formal structures (i.e. where a pricing team sits within an organization). Choosing a team of people from different teams who are bought into value and that have influence (regardless of title or where they sit) around a common goal, such as new product launches, is key.
- What are people are measured or even congratulated on? Are sales leaders highlighting the right accomplishments that align with value? Celebrating high-volume, but low-margin wins can gloss over what was left on the table, and can undermine the effort to create a culture of value.
- If you’re rolling out a strategic pricing journey, and nobody walks out at any point during the process, are you really implementing change? Or are people finding ways to work around it? There will be friction if you are leading a true transformation.
Customer-Centric Decision Making
The concept of customer-centric decision making, as well as the associated impact it has on a company’s brand, was also widely discussed. It was striking, but also logical, to me how these trends in the pricing world overlapped with recent trends in B2B marketing (both borrowing heavily from well-established B2C marketing concepts). After all, the underlying market forces are the same: the internet has created a world where information is readily available, and the majority of buyer decisions are made before they come into contact with a seller.
How does this affect companies looking to implement Value Pricing? Vishaal Jayaswal, Vice President of Value Strategy at Cox Automotive reflected on a long career spanning different industries, from automotive to media and consumer products. He pointed out that each of those industries is being disrupted in some way by digital innovation. In a world where acquisition channels are increasingly saturated, many business teams are increasingly applying the same vigor to retention. He shared that not only is pricing an overlooked lever by most organizations, but research has also shown that it can be even more impactful on a per-dollar basis than implementing retention strategies (which in turn can more impactful on a per-dollar basis than acquisition). He then shared some best practices around implementing these strategies, which echoed many of Ms. Roberts’ key takeaways, such as:
- An emphasis on organization-wide alignment around value.
- Enabling teams with the tools and processes they need to succeed.
- Bundling strategies that allow teams to extract more value from multiple products.
- Celebrating wins across the organization to establish a value-based culture.
Incorporate Value Early in Product Development
Alok Khatri from Philips Healthcare took a different approach in analyzing the intersection of customer experience and value pricing. During his session, he contrasted the difference between the traditional way of building a value pricing strategy – beginning with the product, setting the price, and defining the ideal customer – and a more modern way, where you identify a customer need, build a Value Proposition, and develop your product and price from that.
He used the example of the Fujifilm Instax, a wildly successful camera (think of it as a modern analogue to a Polaroid camera), that perhaps may not have taken off without a customer-centric development mindset. As Mr. Khatri said, the basis of creating the product wasn’t based on an untapped need for a point-and-shoot camera – after all, most people have smartphones – but the desire for something small, tangible, and perhaps nostalgic.
The problem it solves? An unmet desire for the ability to capture a moment non-digitized way (without jumping through hoops like going to CVS, or using online printing services). Because this product satisfied a distinct customer need, it could be priced in a way that captures the value (tangible and intangible) perceived by customers, which in turn played a role in creating a successful product offering.
But there is a key underlying point here: modern teams looking to capture value begin to do so early in the product development process, and extend this value-based mindset throughout the product launch, marketing, and sales process. During Mr. Jayaswal’s session, he did a live audience poll that asked members at what point is pricing strategy initiated in their organization. Nearly half responded that this occurred after the product development stage when the product was ready to go to market.
The fact that nearly half the respondents (and presumably companies) did not incorporate a pricing strategy until after the development process means that there is a massive business opportunity to companies who decide to incorporate it earlier.
LeveragePoint is the only tool that helps business teams manage this value journey in one, cloud-based tool. In addition to learning from some of the world’s top pricing experts, it was also a pleasure to meet many of our successful customers, as well as other pricing professionals at our booth. Overall, it was a fantastic introduction into the world of pricing, and hats off to the folks at the Professional Pricing Society for putting on a great conference.