Contenu connexe Similaire à B2B Price Guidance with Impact: putting the pieces together (20) B2B Price Guidance with Impact: putting the pieces together2. © een Consulting GmbH 2
Ian Tidswell Biography
Founder of een Consulting, focused on helping B2B companies develop best-in-class
end-to-end sustainable pricing processes
Professional Experience
• Since 2016, Independent Professional, Switzerland
• 4 years, Global Head of Pricing, Syngenta, Switzerland
• 2 years, Pricing Transformation Lead, Medtronic, Switzerland
• 6 years Partner, Head of Business Consulting, Vendavo Consulting, UK and USA
• 4 years, Director, i2 Technologies, USA
• 4 years, to Engagement Manager, McKinsey & Company, USA
Selected Experiences
• Developed a pricing framework & process for pricing innovations for out-licensing for leading diversified
industrial company
• Built the HQ global pricing team for Syngenta. Indirect management of in-country pricing managers
• Lead multiple in-country projects for Syngenta to diagnose pricing opportunities and actions to address
price setting, commercial terms management & price execution challenges
• Lead development of a global commercial terms/policy framework and playbook to align CT/P with
strategic goals in each country within Syngenta, improved CT/P performance and enabled automation
• Headed the strategic initiative to substantially improve, harmonize and automate Medtronic
International’s pricing processes across all major markets. Drove improved pricing & risk exposure
• At Vendavo successfully led discovery, design and deployment of Vendavo price system at multiple
customers including chemicals, distributor, semiconductor, tire and mobile phone manufacturers
• Frequent speaker at global pricing conferences
Education
• Ph.D. Physics, Harvard University, Cambridge, Massachusetts, USA
• B.Sc. in Physics, Imperial College, London University, UK
At a glance
• Former McKinsey senior
consultant with line
management experience
in MedTech and agri-
chemicals business
• Proven B2B Pricing
transformation leader
• Practical, hands-on
approach with track
record in value delivery
• Based in Basel
Switzerland
• LinkedIn Profile
• Email:
ian@eenconsulting.com
3. © een Consulting GmbH 3
Introduction
• In B2B sales where there is a negotiation, the sales person is
setting or influencing the final price paid by the customer
• In these cases, guiding sales to an appropriate price corridor can
have a significant positive impact on realized pocket prices by
avoiding unnecessary discounting
• This presentation covers the key elements to implementing an
effective price guidance process:
• What type of price guidance to give
• How to get the sales team’s attention
• Approaches to come up with the specific guidance
• How to ensure it all comes together in a sustainable way
4. © een Consulting GmbH 4
Price guidance puzzle pieces
What type of price
guidance to give?
What specific
guidance to give?
How to pull it
all together?
Why is price guidance
important?
How to get the sales
teams to pay attention?
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Why is price guidance important?
Why have price guidance specifically?
• Sales people are not analytical:
dashboards won’t cut it
• Not pricing experts: need to guide
them appropriately but allow for
exceptions
• “Anchoring”: sets expectations for
price performance
• Primary way for product marketing to
influence sales during negotiations
Price guidance needed when sales have
a role in price negotiations
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Price guidance puzzle pieces
What type of price
guidance to give?
What specific
guidance to give?
How to pull it
all together?
Why is price guidance
important?
How to get the sales
teams to pay attention?
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What type of price guidance to give?
• Two options:
• Individual elements
• Key price point(s)
1
2
222
1
1
1
• Price point(s) recommended
• Simpler to manage that
individual waterfall elements
• Sales flexibility to tune offer
details to customer preferences
• Adjustments can be managed in
other ways (e.g. segment
rebates, campaigns)
2
Price Waterfall
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Which price points to focus on?
• Pocket Price is usually the
best option
• Controlled or influenced by sales
• Strongly aligned with Economic
Value Added
• Net Price can be an option
• If sales does not influence
non-cash costs (e.g. fixed
payment terms)
• Non-cash costs are very hard
to measure
• Invoice Price may be an additional
control point given the
transparency/risk of price erosion
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How to control the Pocket Price?
• Price corridor, consisting of:
• Target price
• Approval levels (e.g. sales manager, sales
head, country price manager)
• Target is key component
• To create upward price tension
• As basis of price realization metrics
• No more than 3 approvers
• More slows the process too much
• Last approver can address special
concerns e.g. legal, risk assessment
• Basis for Price Realization Score:
• Target price = 100
• Sales rep floor = 50, etc.
10. © een Consulting GmbH 10
Price guidance puzzle pieces
What type of price
guidance to give?
What specific
guidance to give?
How to pull it
all together?
Why is price guidance
important?
How to get the
sales teams to pay
attention?
11. © een Consulting GmbH 11
How to get the sales teams to pay attention?
Key Success Factor Details
Make it a foundational part of the
sales process mandatory
• Avoid leaks in all negotiations, even the
smallest 20% that drive price erosion
Price Realization Score adopted as
a core management metrics
• Price realization score enables comparisons
across customers and products
“Reasonable” guidance owned by
product marketing
• Not skewed by optimistic targets, politics,
bad data
Context specific & timely
for sales
• Must add-value to sales
• Adjust quickly when market changes
• Feedback loop to continuously improve
May require technology
to support
• Enables scale, process discipline, data
quality, closed-loop feedback
Will require a big Change
Management effort
• Fundamental change to how commercial
performance measured
• Do it right the first time: once established
will be robust process
• Sales managers are the key role
12. © een Consulting GmbH 12
Price guidance puzzle pieces
What type of price
guidance to give?
What specific
guidance to give?
How to pull it
all together?
Why is price guidance
important?
How to get the
sales teams to pay
attention?
13. © een Consulting GmbH 13
What specific guidance to give?
Price guidance should be based on:
Pricing Power…
…for a given segment…
…based on strategic goals,
experience, and data.
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Base price guidance on the pricing power by
customer segment while respecting strategic goals
Product&Service
ValueDifferentiation
Reduced Cost
Direct
Added Value
Less Tangible
Added Value
• Features that make the
product more attractive
to end-users
• Raises the “willing to
pay” by indirect means,
e.g. more reliable,
simpler, etc.
• Reduces the cost to
supply the end product
Value Differentiation Competitive
Intensity
Customer perceived performance
Customerperceivedprice
Value advantaged
Value disadvantaged
• Brand position, strength
• Number of competitors
• Market shares
• Channel influence
• Supply/Demand situation
• Supply coverage
Customer
Segmentation
Strategic
Goals
Pricing
Power
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Segmentation can increase the value you
create & capture
• Different segments may have very different willing-to-pay
• Segmentation can get very complex: what really matters?
• Varying prices requires “fences” between segments, e.g.
– Product branding, specifications, bundles, services
– Regulatory approvals
– Natural market differentiation
• Start simple, and add elements based on experience and skills
Product End-user Channel
Strategic importance Application Size
Differentiation Location Profitability
Revenue rank Cost-to-serve Value-add / services
Profitability Market power Market power
Behavioral Behavioral
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Process & tactics for determining the guidance
Strategic
goals
•“Must wins”
•Long-term objectives
•Available resources
•Risk profile
Rules based
•Based on goals and analysis, e.g.
•Level of sales discretion
•Minimum margins
Historical
transaction
based
•Recent prices for the segment
•Scrutiny of low-price tail
•Beware of misleading exceptions!
“Big data”
patterns
based
•Requires great data
•Beware of spurious
patterns (e.g. sales
rep behaviors)
Increasing complexity,
effort, skills, risk
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Price guidance puzzle pieces
What type of price
guidance to give?
What specific
guidance to give?
How to pull it
all together?
Why is price guidance
important?
How to get the sales
teams to pay attention?
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How to pull it all together
Get buy-in for the price corridor concept and implement
The goal: it becomes a
core day-to-day process
Big one-time push on the
change management
Price Realization Score
becomes a key metric
Make the guidance relevant, actionable,
continuously improve
Start simple with basic
segmentation and data-
influenced rules, not data
driven rules!
Learn by doing: add
sophistication gradually
Consider a price decision
support systems
Scale up to address the
whole portfolio (incl. the
leaky bottom 20%)
Facilitates collaboration
across the organization
Improve responsiveness
Improves process integrity,
sustainability
Build a clean(er) data set
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Summary
• Potential to add huge value
• Not dependent on strategy
• Once foundation in place
guidance can be improved
over time
• Not easy, but well worth it!
What type of
price guidance
to give?
What specific
guidance to give?
How to pull it
all together?
Why is price
guidance
important?
How to get the
sales teams to
pay attention?