Price is the foundational element of any company’s revenue.
NB: This is an article from Revenue Management Labs
To create a high-performing pricing organization, the right infrastructure (people, systems, processes) needs to be in place. Listed below are the 8 traits of high-performing pricing experts that can help you deliver world-class pricing strategies.
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1.Understand The Value of Pricing:
Pricing is one of the least focused performance levers in an organization. Often to increase profit, companies rely on either cutting costs or increasing volume. We can see this by the investments that are made into outsourcing, adjusting production, increasing sales team coverage, aggressive marketing, etc. It’s critical to understand that a 1% improvement in pricing has a 3 to 4X more profit impact than cutting costs or increasing volume. Pricing experts should evangelize this message throughout the organization to ensure its proper prioritization.
2. Pricing Tools:
For pricing experts to successfully deliver a pricing strategy, they require access to the correct tools and systems such as Tableau, R/Python, Power Bi, etc. These tools help pricing experts analyze and visualize data, so that they can better validate business insights. Lack of adoption of these analytical tools leads to a sub-optimal pricing strategy, as your team can’t get to the insights they need in a timely manner.
3. Ideation to Delivery:
A common misconception is that pricing experts are solely “number crunchers”. They spend their time undertaking conjoint analysis, calculating price elasticities, and building price lists. Unfortunately, insight development is only the beginning of building / integrating a pricing strategy. Your pricing experts need to be able to explain the strategy to the internal team, roll the recommendations down to an account level, participate in building value-based selling stories, create negotiation guidelines, and the list goes on. Essentially, your pricing experts need to take insight from ideation, to full customer execution and performance tracking.
4. Solution-Oriented Mindset:
Executives often tend to focus on problems. This causes them to frame issues in a negative light and introduce stress into the organization. Pricing is already a very emotional topic, which often stifles critical thinking. It is essential that pricing experts frame insights as opportunities. This will refocus cross-functional partners to a solution-oriented mindset and motivate them to champion pricing initiatives.
5. Be Customer-Centric:
Pricing experts put themselves in the shoes of their customers and end consumers to understand their needs and wants. By intricately stepping through the customer journey, they can understand price sensitivity, competitors considered, value driving attributes, and relative performance versus the market. This helps pricing experts determine where pricing leverage exists and to be able to substantiate insights, both internally and externally, at a granular level.
6. Foresee The Future:
Pricing at its core is about predicting consumer behavior. Key to the word “predicting” is that pricing experts should be focussed on the future. Pricing teams sometimes fall into the trap of focussing solely on historical data and looking in the rear-view mirror. Instead, pricing teams should be focussed on predictive analytics, such as choice models, to drive action.
7. Perpetual Learner:
Markets are constantly shifting due to supply chain issues, inflation, labor shortages, etc. Customer needs are evolving. Tools and systems are being upgraded, with almost daily developments in big data solutions. All these changes make it essential that your pricing experts embrace ongoing development and are perpetually learning.
8. Build Team Relationships:
Developing strong internal relationships with cross-functional teams is essential for pricing experts to be successful. This partnership helps them gather more diverse insights, test the feasibility of changes, and help get solutions executed.
