Pricing Leadership

As more and more companies are looking at pricing, they are asking themselves, “what can we do to jump start the process?” Ultimately, it’s understanding how you price.

On each of our implementations, PROS conducts a “Day in the Life” of potential users; we call this “riding in the truck” as a reminder – because we actually rode in the sales truck of one of our customers! This is the only true way to fully understand how, empathize with, appreciate the pains, and absorb the pricing practices of those users. If pricing is such a strategic lever that can make a significant difference in your profitability, shouldn’t you be willing to invest the time to understand all the corners of your organization’s pricing practices in order to squeeze out as much ROI as possible?

The question is: how do I conduct these Day in the Life sessions? I can start by telling you what not to do… don’t just ask questions! Put yourself in your employees’ shoes… if they are called into a room, and must answer a bunch of questions about how they do their job, what do you think they are imagining? No matter how you prep them, how you preface your message, or how you triage any malcontent, they will be nervous. Unfortunately, that feeling will result in them answering the questions they way they “think” you want them to answer. Anyone can put concepts on paper, which is what their answers will no doubt provide; you are trying to get at the dark and ugly truth about price and profit leakage. Therefore, take the “interview” to the next level… go ride in the truck.

But don’t just observe in the “white lab coat, clipboard, and one-way mirror” sort of way… observe AND interact. Ask “why did you [insert activity here]” until you fully understand – don’t assume anything. Then go beyond observation and interaction: solicit their feedback for how they would improve their processes. What else do they need? What could they do without? What typically causes them to sit around and wait for three days while your competitors steal your business? Get them to believe they will have an impact on the outcome, the new process that they will be asked to follow… BECAUSE THEY DO! Once you have this buy-in and belief in your employees that you want them to do better and are willing to give your time and efforts to help them, the truth comes out.  It’s only then you can work with your cross-functional team to improve your pricing processes in a way beneficial to all… because you know how your organization really prices.

Recently, we have seen many companies attempt to implement with little oversight to the overall, “global” picture.  Now, before I continue, notice I did not specify what they were implementing.  It could be as simple as a new approval process or as complex as a new ERP system.  Also, one could easily replace “global” with any other contextual word that refers to “more than one”, but I digress…

Regardless, in these tight times it seems more and more acceptable to identify process improvements and start down the path of a “global” improvement without stopping to think how one gets from A to Z without stopping at B, C, D, etc.  You may be wondering, “how does this apply to the title or a ‘thousand-island paradise’ of data?”  Simple – many companies have data sources that are currently working perfectly, as-designed, as-expected (insert your own adverb here to describe facetious perfection) but have little in common with each other.  Projects, especially pricing projects, that are incredibly dependent upon data, must have a global approach in mind. Companies must have a plan to take a “thousand disparate data sources” and harmonize them.

All that’s needed is a process in mind and a plan in place, not the actual data harmonization.  Incredible value can be realized through a small implementation, and as Lao Tzu famously quoted, “the journey of a thousand miles begins beneath one’s feet.”  No value will ever be achieved if you wait for perfect data (honestly, I’ve never even seen perfect data). Expect to start small, achieve great results (regardless of how small the results are they are “great!” – socialize the wins!), and use those results to incentivize other areas of your business to join the project bandwagon. Take those “thousand islands of data paradise” and show each, one at a time, how they can improve for the overall health of your business. The results are there to be had!