CRM - October 2008 - (Page 34)

PRICE OPTIMIZATION WHERE IS IT? “A lot of people are misguided or have misunderstandings about price optimization,” says Kevin Bandy, partner and global lead for sales and marketing transformation with business consultancy Accenture. (Bandy was also named one of CRM magazine’s 2008 Influential Leaders in the September 2008 issue.) He evokes the old image of business directors locking themselves away somewhere in the dead of night to pore over spreadsheets and make penny-ante changes to individual sticker prices. It’s an image that I can relate to from my high school days as a cashier at the local Pathmark supermarket: The managers would do just that every weekend, and the cash registers would have to run manually—without the laser scanner—until they were done. While those days are long gone, the supermarket example illustrates one of the misconceptions about pricing software: that it’s really only useful for retail. One look at PPG’s success with Zilliant shows the broader vista. “Some coatings have petroleum ingredients, so we’ve had to PLOTTING THE TRANSFORMATION Pricing technologies need to be implemented on a case-by-case basis, with nuances that are specific to a company’s industry, products, services, and customers—as well as what Accenture refers to as “broader economic forces.” That said, the consultancy has identified certain patterns that are universal to most pricing efforts, and has broken the process down into six phases that should be tackled in sequence. What follows is an excerpt from Accenture’s report. 1. Run a pricing diagnostic. Implementing a diagnostic is necessary to obtain a picture of current pricing capabilities, build a case for the benefits of a transformation program, start to sketch out the pricing strategy and goals, evaluate product vendors, and draft a plan for overhauling your pricing capabilities. 2. Build a modeling platform. Test your initial assumptions, set investment goals, and develop a rollout plan. 3. Design pricing models. Create your pricing models and integrate them into your pricing strategy. Then you’ll be able to identify any gaps in your pricing capability. 4. Build pricing infrastructure. Craft the framework for your pricing processes. Revise your organization to accommodate a dedicated pricing group. At the same time, you should evaluate, test, and build the appropriate technologies. 5. Embed pricing capability across the company. With the foundation elements in place, you can: roll out the revised pricing program; perform the necessary due diligence on basic pricing capabilities elsewhere in your company; and train and prepare staff. 6. Measure the impact. In this final stage of the launch process, develop the requisite scorecards and benefits assessments, fine-tune roles and responsibilities, and set out guidelines for compliance with the objective of fully deploying the pricing lifecycle. Run a pricing diagnostic Build a modeling platform Design pricing models Build/refine infrastructure Embed pricing capability across the company Measure the impact and continuously adjust • Obtain picture • Test initial • Create pricing • Lay out framework • Roll out revised • Develop requisite of company’s pricing capabilities • Build case for benefits • Sketch out pricing strategy and goals • Evaluate product vendors • Draft plan for overhauling pricing capabilities assumptions • Set investment goals • Lay out rollout plan models • Integrate models into pricing strategy • Identify gaps in pricing capability for pricing processes • Revise organization design to accommodate dedicated pricing group • Evaluate, build and test appropriate IT solutions • Execute pricing program • Perform necessary due diligence • Train and prepare staff scorecards and benefits assessments • Fine-tune roles and responsibilities • Set out guidelines for compliance with new pricing rules with objective of fully deploying pricing lifecycle 34 CUSTOMER RELATIONSHIP MANAGEMENT | OCTOBER 2008 www.destinationCRM.com http://www.destinationCRM.com

Table of Contents Feed for the Digital Edition of CRM - October 2008

CRM - October 2008 Contents Front Office Feedback Reality�Check Customer Centricity The Tipping Point Sprinting Toward Disaster? SAP�Retains Market-Share Lead in�CRM A�Week of Strong Customer�Service CRM�on Twitter Build a Good Event and They Will Come Required Reading There's No Place Like Home The New Breed of CRM�Consultant The Price is Right...You Hope How Much Marketing is Too�Much? The�Sweet Smell of High-Quality�Service The Next Act! For An Acquisition Some Stories Never Get Old CRM�Eases the Pressure For WIKA�Instruments Secret of My Success Re:Tooling Scouting Report Pint of View

CRM - October 2008

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