by Finn Helmo Hansen, Founder & CEO, Stratinis
Pricing teams, when first established, will often spend time
on getting a series of pricing analytics in place, as transparency and
understanding of internal prices, discounts, rebates and profitabilities is the
first step in establishing a good pricing function. This is sometimes
accompanied by investments in various reporting tools. What is important to
keep in mind however, is that pricing analytics is not the end goal but rather
a stepping stone towards true best-in-class pricing performance. Analytics
should support other pricing processes, not just end up on the quarterly
PowerPoint presentation to the board.
One area to consider is how pricing analytics insights can
be communicated to the sales team and used in helping them do better pricing at
the sharp end of pricing. Good examples here are pocket price tracking,
profitability performance per sales area and similar aggregate analytics, but
much more actionable than these are exception reporting about customers and/or
products below target prices.
Another area is how pricing analytics can be used to
challenge current pricing strategy. Are we really pricing optimally? Can we
achieve higher prices in some segments? Should we segment our pricing policy
per customer segment or product group? Pricing Analytics Insights can help
identify new segmentation criteria such as velocity-based pricing
How are we pricing against competition? Do we lose bids
against competition and at what price? In other words, do we need to improve
our value offering?
A very useful tool can be to establish a strategic pricing
scorecard and use pricing analytics to measure performance against action KPIs.
This technique ties strategy with action and uses KPIs to measure how well
various organizational units perform.
Stratinis is offering a webinar on March 3rd, on
the topic of how to get more out of pricing analytics. For more information on this webinar and to find out how to register, please visit our website.