The Pricing Journey: The Organizational Transformation Toward Pricing Excellence by Stephan Liozu

Author:Stephan Liozu
Language: eng
Format: mobi
Publisher: Stanford University Press
Published: 2015-04-28T14:00:00+00:00

The strength of the innovation culture ranked seventh, a fact many executives should find encouraging, as it suggests that even a subgenius company can succeed in pricing. Nor did systems communication matter much—although this factor, ironically, is the change skill that pricing consultants tend to focus on most.

Once the change is made, the next question is, how do you make it stick? Most transformations offer plenty of opportunities to go back to the old ways and to stop progressing. When do you know that change is here to stay? How do you maintain new behaviors over time?

Transformational and Irreversible Change

The implementation and internalization of pricing knowledge requires deep organizational changes that will transform the fabric of a firm’s life and identity as well as the identity of its members. This transformation is not just a matter of adding a new module to the enterprise resource planning system or a new pricing schedule to the reps’ sales kits. Instead, pricing adoption requires a slow “mutation” of what participants in my research studies called their “firm DNA.” Although this shift away from a focus on prices based on cost or competition to prices based on customer value must eventually include the cooperation of the entire organization, it generally begins with the pricing team and then moves on to sales.

Sales cooperation is vital. Most firms underestimate the sales team’s tendency to resist pricing structure changes and their power to block or derail pricing initiatives. In my experience, the only way to overcome their resistance is to do the following:

• Get sales involved from day one. Your reps should be included in the road map design, strategy discussions, brainstorming sessions, blueprinting, meetings with pricing vendors, customer interviews, and more.

• Avoid surprises. By getting sales leaders actively involved in the various programs of the transformation early on and keeping them involved, the sales team will be much more likely to go along with whatever happens next.

• Communicate a vision and a road map. To be a good accountant or logistics person for your company, you don’t necessarily need to believe in your company’s offering. But to be a good sales rep, you must be able to convince people outside the organization that your offering is best—and that means you must be either a great actor or a true believer—and preferably the latter. A lack of alignment about the pricing strategy can deeply undermine this kind of faith. Sales teams hate having to deal with too many uncertainties and a lack of strategic direction. Explaining why, when, and how things are going to happen may not win them over, but it will help keep your debate focused on real issues rather than rumors and conjectures.

• Focus on “What is in it for me?” To the individual, the organization’s priorities are always secondary. Buy-in for any new program or process is always easier when the individual understands how it will help him.

• Conduct brainstorming sessions with the sales force. Asking a series of questions, such as (1)

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