If you’re just now joining us, welcome aboard the Syncron conference express! The team is here in Budapest for the 7th Annual Manufacturing Pricing Excellence 2019 Conference hosted by Copperberg. We’re excited for two full days of networking and learning amongst our pricing peers, where we’ll work together to optimize the power of pricing through value-based pricing, recruiting pricing professionals, bridging the gap with sales and navigating the many ways digital pricing impacts processes today.
The first topic we’re tackling? How to get a clear perspective on pricing during digital transformation. Simply put, digital pricing success requires five major strategies: focus on speed, little-to-no-touch pricing and segmentation, built-in trust in Artificial Intelligence (AI) and pricing science, dynamic and variable pricing and the overall modernization of the pricing side of the organization. But, before we do that, we need to unlearn some of the pricing habits we’ve adopted over the years in order to evolve with our customers.
But, digital transformation is happening today, and in order to meet the objective of a better customer experience, digital pricing needs to transform as well. Back in the 1990s, pricing professionals focused on two big ideas: using price as the most powerful profit lever and measuring success based on the making sure the price is right. It wasn’t until the third big idea, price variation without rationality, took over and caused a typical reaction of applying analytics to solve bad-decision-making and take pricing away from the front line. This resulted in a lot of companies creating convoluted processes with multiple touch points, slowing quote time and losing revenue.
Now, companies are quickly realizing that pricing has a major impact on their bottom line, and one of the key reasons is the changing customer. Customer buying habits have changed drastically over the past few decades in four major ways:
- Sales experience is the new key to revenue growth. The sales experience is all about convenience – are you easy to do business with? Are you trustworthy? This experience is the number one driver to revenue growth.
- Speed is increasingly a competitive differentiator. How likely would you be to move your business if you could order via a mobile app? Faster quote turnaround times drive higher win-rates.
- Customers quickly abandon sellers who do not provide real-time pricing. In fact, nearly 66% of customers are extremely likely to pay a premium for instant pricing information, but unfortunately, most B2B companies are ill-prepared.
- Customers trust algorithms more than they trust people. Sophisticated vendors use data science to price quotes to ensure that they have optimized the offer by accounting for current market conditions, inventory levels, purchase history and cost changes.
“50% of customers choose the vendor that responds first.” – InsideSales.com
Ultimately, the risk pricing professionals take when they don’t take these customer changes into account and get the pricing process wrong leaves them saddled with money left on the table, along with a reduction in win-rate and downward price pressures that cause inconsistent, siloed, impersonal, static and slow processes. And, at the end of the day, if you can’t quote quickly, prices can’t move with the market and a disconnection grows across sales channels.
So, how can pricers evolve alongside this digital transformation? Simply put: by modernizing their pricing to match the changing customer expectations. Traditional pricing models protect pricing and margins, creating controls to manage, monitor and execute pricing and create models to match price to value. But, the focus here is 80% on price execution and 20% on strategy.
Modern, digital pricing and commerce, however, enables nimble market pricing, helping pricers transition to no-touch pricing and implement repeatable, largely self-running dynamic pricing models. It’s ultimately about a continuous ideation and testing of pricing assumptions and strategy, and maintaining competitive pricing is a number one focus companies should prioritize when shifting to a digital, dynamic pricing model.
Syncron is proud to sponsor Manufacturing Pricing Excellence, the premier event for European pricing professionals. Join us as we share our experience via social and on the blog during the roundtable meetings, performance workshops, content sessions and more. Tweet us @SyncronSCM to connect with a Syncron team member at the event!