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 opportunities.
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.