CEOs and PE firms alike have mastered the art of value creation through improving financial, talent, and operational efficiencies, but sometimes go-to-market market performance improvements seem to cause more trouble, and nowhere is this more prevalent than in pricing.
Though we’ve covered pricing in a previous article, it can feel very theoretical, so I wanted to hear from someone who’s been on the front lines for some more practical advice, and who better to provide that than a seasoned pricing leader like Chris Pople, Head of Pricing at Antalis, and previously of Adecco, SIG, Cromwell and RS Components.
Chris has been working in pricing for 15 years, and with that brings a wealth of experience on the science, and art, of pricing. I wanted to get an idea of the do’s and don’ts of pricing; the quick-wins, common pitfalls, and best practices that Chris has picked up on throughout his career, and as he was introducing his work, I learned my first lesson.
“It’s not just about the numbers”, he begins.
“In most of my pricing roles, I spend less than 10% of my time on pricing. Most of it is focused on change management, and getting businesses focused on value based-selling.”
He emphasises that most businesses lose focus on what they do to solve the customer’s problem, and according to Chris, realigning the whole organisation to those values is an important early step in any pricing strategy.
Drawing from his experience with growth consultancies, and his love for Leicester City FC, Pople offers a new perspective through a football analogy: “Most consultancies see the pricing team as the manager or coach of the team. I see us more as the grounds staff. We’re here to make the pitch as best as it can be, setting the boundaries on which the sales team play their game.”
As our conversation delves into the complexities of pricing strategies, it becomes clear that Pople advocates for a more holistic approach. “Pricing,” he asserts, “Is one of 5 or 6 functions that bring value to the customer. Very rarely have I seen a pricing project executed by a pricing team on its own.”
He lists the teams he most often collaborates on these projects with:
“Essentially the whole business entity”. He says, describing how these functions work together to generate value, articulate it to customers, and represent that value with a price, then concludes: “I would say a more accurate representation of pricing is as a part the customer value management portfolio of functions.”
As he sits back, I take a moment to dig deeper on the teams involved, inquiring about the lack of pricing teams in most organisations, and to whom the burden usually falls.
“The clever organisations are creating their own pricing functions,” He replies, “but in the vast majority of cases, pricing has been a growing function from within, not standalone.”
He talks about pricing being integrated into sales, finance, product development, and the various associated drawbacks, then argues that the best place for pricing is within a transformation team. “All companies are on a transformation journey, just at different stages.”
He then addresses some typical points of resistance to such changes, often hearing ‘we haven’t got a pricing problem’ or ‘that’s the best we can do in the market’, and the plight of the sales team, who typically receive mixed messages about the strategy of the organisation.
Then Pople shares a trick he commonly employs to rectify this: “I like to get them into a conversation: what are we famous for, what are we known for, what do we also do”. By segmenting the product range or service offering in this way, he can start focus pricing competitiveness in the ‘famous for’ areas, whilst margin enhancing at the other end of the spectrum, simultaneously helping the sales team to understand the organisation’s core values.
During his tenure as a pricing specialist, Chris often meets resistance to some of the changes he suggests. To mitigate this, he likes to find a set of advocates in the sales community: “I’ll take someone through the pricing logic, get them bought in, launch it, and when they start seeing results those advocates are all in. Then you’ll get others who see what’s happening and say ‘well I can do that, can you help me?’, and slowly you’ll bring people around.”
He adds “You’ll always get some people that are never going to buy in, so I take the 80-20 rule. If I can take 80% of the people on the journey with me that’s good enough, I’ll let the management team deal with the other 20%.”
Reflecting on mistakes and lessons learned, he stresses the importance of incremental change. “The biggest mistake,” he shares, “is trying to do things quickly for impact when actually the business really isn’t ready for it.”
As we approach the end of our allotted time, both with less interesting meetings looming, I take the opportunity to enquire about some of both the surprisingly simple, and deceptively complex, changes that he’s implemented in the past.
“Some of the easiest things to do are reviewing terms, whether its discounts, contracts, etcetera; Harmonising price distribution, and categorising your potential tactics by risk so you know where to start.”
One of the hardest things to get right, he explains, is truly understanding competitive pricing. Due to a lack of price transparency in the market, people often get uncomfortable extrapolating what limited data they have to make more informed decisions.
He recites the common steps he takes: doing a contractual terms review, clearing out loss making products/clients, looking at sales behaviour, challenging them, and setting a strategic direction, then finishes with one final analogy: “Often pricing seems like a chasm that you’re trying to leap, but you don’ have to cross in a standing jump, you can build momentum with a series of small changes and by the end, you might not even realise you’re on the other side.”
Chris’s Tople Tips:
Focus on value-based selling
Get the whole business involved
“What are we famous for, what are we known for, what do we also do”
Find your advocates in the sales function (80/20)
Start at low risk changes, build momentum
Make small, incremental steps
If you’d like to discuss how you can understand the drivers of customer value to inform pricing strategy for your business, please Contact Us.