By: Dr. Stephan Liozu
Transforming the mindset and DNA of a firm from cost to customer value is a long term project requiring transformational change and leadership. It also requires the use of a different vocabulary that ignites people’s spirit and motivation. The language of value and change is a language of hope, positivity, success, and energy.
Here is a real example from a recent conversation with a pricing leader to illustrate the required change in vocabulary and mindset:
From: “We do not pay attention to profit leaks and do not control the erratic discounting behavior of sales force. We do not price on value and we use cost-based pricing too much and as a result we leave money on the table.”
To: “Our intention is to improve the importance of customer value in how we price our products and services so that we can capture more value in the market and identify areas of profit opportunities and reduced leakages. The sales force plays a significant role in the success of our pricing programs and it is our responsibility to bring them on board.”
Let us do a quick analysis of words in the first sentence:
– Words with negative connotations: not (3), leaks, erratic, control, discounting, cost, too much, leave = 10 words.
– Words with positive connotations: profit, value = 2 words.
Let us do the same exercise for the words in the second sentence:
– Words with negative connotations: reduced, leakages = 2 words.
– Words with positive connotations: improve, value, capture, more, opportunities, significant, success, on board = 8 words.
Now you may disagree with the classification of the words and the counting mechanism. The point here is to show that the ratio of positive to negative words can make a significant difference in the change of a firm’s DNA. Positive words create energy, hope and confidence while negative words have a tendency to reinforce negative patterns and resistance to change. I am not the only one to say this. It has been studied by some of the best behavioral scientists in the world such as Coleman, Boyatzis, and Fredrickson (who have studied the speeches of the most charismatic change leaders in the history of mankind — Gandhi, Martin Luther King, Jr., Nelson Mandela, Bill Clinton, Charles DeGaulle, Mother Teresa, etc.). These experts recommend a ratio of 5 positive words to every 1 negative word.
So what does that mean for pricing and marketing practitioners? It means that you have to be aware and mindful of the words you use and the ratio of positive to negative words when you are trying to change behaviors in teams. I am not saying you can no longer use some of the words listed in the table below. For some of them, you have to use them to make a point. The main point is to have a balance in the words you use and how you use them.
When crafting communication strategies to support pricing projects and change programs, practitioners must make the effort to use a greater number of positive words around value and change. Value stories and critical value messages also have to be positive and hopeful. They have to use the customer language and carry a vision of success, pride and accomplishment. The practical way to do this is to analyze your messages and presentations as we did earlier in this post. It does not have to be a perfect science. Your marketing communications experts can help you with the process especially when you build value stories and communication material for change.
Be bold. Join the value-based revolution!
About Dr. Stephan Liozu:
Dr. Stephan Liozu is a Pricing Evangelist and Thought-Leader as well as the Founder of Value Innoruption Advisors. He specializes in the design of innovative and differentiated business strategies for B2B firms, and the implementation of value-based pricing strategies. His acclaimed Customer Value Modeler (CVM®) certification program trains professionals in value modeling best practices. Stephan is co-author of Innovation in Pricing and A User’s Guide to Value Modeling as well as numerous academic papers. He holds a PhD in Management from The Weatherhead School of Management at Case Western Reserve University where he is an Adjunct Professor and a Visiting Scholar. Stephan sits on the board of Advisors of PPS. Stephan can be reached at firstname.lastname@example.org.
Want to learn how to begin value-based pricing?
Watch the on-demand version of Dr. Liozu’s webinar: “The Fastest Way to Begin Value-based Pricing.”