PPS Podcast: Pricing As A Team Sport
This conversation will focus on the importance of transforming your pricing processes to meet evolving B2B buyer needs. When you decide to embark on transformation, that's only the first step! Listen in to learn about who to include and why to ensure successful adoption and return on investment.
Want to learn more? Visit pros.com and read, "How Pricing Impacts these 5 Decision Makers".
Transcript:
Terrence: Well, hello, and thank you all so much for yet another professional pricing society podcast and joining us for today's discussion. My name is Terrence, and we have a great conversation ahead of us. Today, we have Jorge Garza. He's a strategic consultant at an amazing company called PROS, who, by the way, will be at our Atlanta Conference this upcoming fall, October tenth through the thirteenth, and they are a long time PPS sponsor....
So we're excited to see them yet again. Jorge is gonna be speaking with us about pricing as a team sport. Jorge, how are you doing today?
Jorge: I'm great. Thank you. How are you?
Terrence: Doing well. Doing awesome. Glad to have you here. Glad to, you know, the nice bright morning today over on my side of town. I'm actually based in Atlanta right now. Not sure if you guys are where are you guys based out of?
Jorge: I'm here in Houston.
Terrence: Houston, nice. Is it hot over there like it is in Atlanta?
Jorge: Oh, yeah.
Terrence: Okay. Cool. Cool. We'll we'll go ahead and dive into this conversation. I wanted to ask you first, you know, what's the significance of digital transformations? When you think about today's business landscape.
Jorge: Yeah. So when you think about today's business landscape, right? Especially like in a post COVID world. Well, a lot of, companies are looking to rein in their pricing. Right? There's a lot of dynamic conditions now. They wanna achieve pricing parity across their different business channels, increased profits, right, gain market share, bringing new customers. But you really saw a lot of companies weren't able to react fast enough, with their current systems, during COVID, right, when all those changes happen and then afterwards. Right? So companies are looking to move toward a towards a more frictionless seamless and digital experience throughout their entire organization.
Terrence: Nice. Nice. Okay. Which makes sense. I mean, that's kind of the way the future is taking us. Now when when you think about the path of digital transformations, what does it typically look or what should someone who has is not familiar, what should they expect to encounter?
Jorge: Yeah. So on that on that path, right? They're, there's a series of steps as as we like to think of it. Right? It's a pricing pricing journey. And so, to most customers, right, there's the first phase and there's the idea of reactive pricing. And that's when a customer is, working out of Excel spreadsheets or companies working out of spreadsheets. Right? They're very reactive on their pricing. They don't they they can't be proactive and strategic. And then so, you think of the next step beyond that. Okay. How do I grow? How do I get better? And that's where you do the initial price management. So you start to apply some rules, some constraints, some methodology, into how you're pricing, and so now you have more of a structure.
After that, as you grow in your journey to towards that maturity model, you introduce the idea of price guidance. Right? And so this is you know, would be like AI powered price optimization where you're looking at your customers, and their willingness to pay and how you can use that to help your sales team and your pricing teams, strategize and execute on pricing. And then after that, you can move into the idea of integrated e commerce. Right? So Now you can bring in your e commerce platform ensuring that your, your price is holistic throughout your entire business, in which leads us to the final step of omnichannel optimization.
And so now all of your business, it's in harmony in terms of how the pricing is executed. Right? You've got the different silos all working together to ensure that the execution of that price is is is is powerful and and consistent.
Terrence: Yeah. That's a lot of, pathways to travel to make sure everything is all synced and, you know, kind of flowing together in unison. Who who makes this possible? You know, how does it happen? Who makes this possible?
Jorge: Yeah. No. That that's a really good question.
I mean, when you think about pricing. When you think about these digital transformations, right, everyone's first thought, oh, it's just the pricing team, but that's not necessarily true, right, because in any kind of digital transformation. You're gonna have at least five key functional areas that are gonna be most affected by pricing. Of course, the first is pricing.
The second is the sales team. Then you have the executive team, the finance team, and then your IT team. Right? And so alignment across these different stakeholders is key and critical, right, in order to make sure that the project is is a success and that, you know, everything can work seamlessly.
Terrence: Mhmm. Okay. Yeah. That makes sense. That's a lot of different departments to make everything work seamlessly.
Which, you know, like, it takes a lot of minds, a lot of hands to make everything kind of flow smoothly, especially in in regards to pricing. You know, why is it important for organizations really in any kind of industry to consider these different five, essentially, slices of the pie when thinking about digital transformation.
Jorge: Yeah. No. That's a that's an excellent question, Terrence. And so if you think about it, pricing is one of the most important decisions a business can make. Right? And it's gonna have a significant impact on profitability, market share, customer satisfaction.
It's gonna, you know, impact, your overall revenue, your integrations as an IT team. So at the end of the day, if all of these five slices are considered, you'll have a a higher chance of success on your transformation, and you'll have buy in and adoption from from the entire organization.
Terrence: Mhmm. Okay. Good. Which makes perfect sense.
Now when you think about, these pricing pathways and just, five slices, these five different departments coming together to make everything, flow, smooth, and unison. What are some of the most common pricing mistakes that businesses often you know, find themselves in or or they tend to make?
Jorge: No. So that's a good question, Terrence. Right? So, the most common pricing mistakes that, you know, businesses can make I'd say the first one is siloing where they're not working together with those other sizes of the pie. Right? Because that's gonna lead to reduced adoption. And decrease the odds of success for this transformation.
Alright. And then the the second one would be to consider the importance of, IT when making these decisions, right, because they're the ones that are gonna have to own the product at the end of the day. You wanna make sure that they're bought in, they understand what's at stake, who's gonna, you know, own what, that way you have everything you need to ensure the pipes are clean to get the data to have accurate pricing.
Terrence: That's interesting from the IT aspect. I have a question I wanna ask about the IT. IT aspect, but but before I ask that I have one more, I wanna kind of ask this stuff related to, you know, the digital transformations and in in this realm.
How can pricing help to optimize the organization's revenue and margins and, essentially, their centric pricing process?
Jorge: So pricing can help because, first, you wanna determine, right, what the right pro right price for the right product is. And so If you don't have the proper data, to make those decisions, then you're putting a lot of guesswork with your pricing. And if you aren't intelligent with those pricing decisions, then you could be leaving a lot of money on the table.
Right? When you think about pricing, there's a lot of factors that go in.
If I have a glass of water. Right? And and, you know, I'm like, hey, Terrence. Or I got a bottle of water.
Right? I'm gonna sell it to you right now. What would you pay for it?
Terrence: For a bottle of water?
Jorge: Yeah. Right now.
Terrence: Now we're talking regular prices or airport prices. Regular prices. I'd probably pay like two or three dollars.
Jorge: Two or three bucks. Exactly. Okay.
It's a hundred and ten outside, and, you know, we've been hiking for, you know, six hours and you haven't had water. How much would you pay for that?
Terrence: I'd I'd pay more. If I if I feel like I need it.
Jorge: Yeah. Exactly.
Terrence: No. I'll pay more. Yes.
Jorge: I wouldn't deprive you of water in that situation. So I'll just give it to you, but
Terrence: But that's a good point.
Jorge: Yeah. The idea is that that people, you know, there's different factors that go into the perceived value or what people are willing to pay or customers are willing to pay for anything. Right? So if you think about that, right?
You have the right data, you now have a system that can use, you know, AI and machine learning to optimize the pricing and not necessarily say this is the only price it's gonna be, but, hey, here's a range of, you know, how, you know, what what's possible in the price. Right? And here's your success on that price, then that can help you have a better understanding of what's gonna impact your revenue and margin.
Terrence: That one is which that's good. That makes a lot of sense. And the analogy kind of puts it into perspective as well, you know, if you feel like you, hiking prices makes more sense if people are in, more demand than what other product or services.
Jorge: I mean, or or, you know, very real situation which you brought up, which is the airport.
Yeah. You're running through the security line. You don't have water anymore. It's like,
Terrence: Exactly. Yep.
And I'm out. I'm based out of Atlanta. So we have Hartville Jackson, which is one of the busiest. And the most populated.
So the prices over there are a little bit different than some other airports, I I would say. I wanna steer the question over towards regarding the IT department. You know, obviously, the IT team is responsible for providing the technology and data that the pricing team needs to make informed decisions.
What are some of the key IT considerations for digital transformation? You you kind of alluded to it a little earlier in the conversation, but because you brought it out once before, I wanna kinda switched gears from the pricing aspect and kind of move it towards IT aspect.
Jorge: Yep. So that's a good question, Terrence.
So ultimately, right, the IT, you want them to ensure that the organization's data is secure and compliant. Right? And then, you know, as I stated earlier, they wanna consider the overall systems architecture So, how are prices gonna get from the pricing team to the sales team? How are the analytics going to get from pricing to finance?
How can the executive team, get a view, and understanding of everything that's happening with with those other slices of the pie? And that's what comes down to that system's architecture.
Terrence: Cool. So the five slashes of the pile, the pricing team, sales team, executive team, finance, and the IT team.
I wanna ask you a bit of off script question. We'll ask you the question as well. Who takes the reins? Where does the conversation begin when considering, you know, changes in pricing, considering things like inflation, trend, pricing trends, who starts the conversation amongst these, these five different departments?
Jorge: Yeah. It could it could come from, the scenarios that you give, it can come from primarily like the pricing team, the executive team, sometimes finance. It could come from the sales team, right, where they wanna what they wanna increase their sales, right, and starts from there and how, you know, what can we do to be more competitive with pricing, but typically it'll be the executive. In in context of pricing, it'll be the executive team or the pricing team. Whether it's sales that originates the that pursuit or it's a pricing team, they're both gonna have to come together in in that decision, ultimately.
So, and the executive team, right, they they wanna they have a strategy. They have a vision. They have a direction they wanna go.
And so, okay. We wanna execute and achieve a certain amount of margin within, you know, the next three to four years, for instance, or for five years. Great. Well, how do you do that?
That's that's the next question. So the how will come down to the pricing. Alright. What are how are we pricing today?
How often are we changing prices? You know, are we able to incur, costing data into our pricing and and execute on it as quickly as possible? Right? So that's where the pricing team will come in and start looking at, how they can be better at pricing and be faster.
And then, of course, you know, I'd mentioned sales. Sales will then be the ones that have to go out to the market and say, alright, this is what we're offering at this price, yes or no. And, if there's negotiation involved, right, then that then you wanna know how far can you go in either direction, right, what's the the the the where where where's your floor? Where's your your your expert price?
Right. Things like that. So Okay.
Terrence: So essentially it can come from almost any direction is situational, what it sounds like.
You did you did break it down, you know, if it's from especially like the how, how we're gonna you know, how are we gonna communicate this price to our customers? How are we gonna make this shift and make it reasonable and smooth?
So it it's glad you broke it down in the way you did because it really can't come from any direction.
Yeah. Cool.
Nice. So Jorge Garza, body, strategic consulting for PROS. Wanna thank you so much for your time today. Good, sir. A friendly reminder pros will be at our fall conference in October.
October tenth through the thirteenth in Atlanta, Georgia. Now, one more question for for you, George, before I let you go, where can listeners go to learn more about the different resources, you know, you or pros have to offer, or just to learn more about you all in general.
Jorge: Yeah. Just to head on over to pros dot com, p r o s dot com. And, we've got a number of assets and resources there for people to get to know more about what we do.
Terrence: Okay. Cool. Sounds good. Well, thank you so much for your time today. Good, sir. And until next time, we will speak to you all later.